BRASILIA (Reuters) – Brazil’s Planning Ministry announced on Friday a zero primary deficit target for 2024, but said 172 billion reais ($35.03 billion) in government spending depends on the approval of a proposed new fiscal framework.
In a statement on the 2024 budget bill sent to Congress, the ministry said that the new fiscal rules “will allow the recomposition and execution of priority public policies for the country,” as well as the functioning of the government.
The long-awaited framework, presented by the government of President Luiz Inácio Lula da Silva at the end of March, is expected to be sent to Congress next week.
It has eased concerns about the uncontrolled growth of public debt under the administration, resulting in a boost in local markets and a strengthening of the real currency against the US dollar.
While awaiting congressional approval, the government has crafted a budget proposal that adheres to the spending cap still in place, which has capped spending growth at the prior-year inflation rate since 2017 but has been breached multiple times.
Lula’s new rules combine a more lenient spending cap with primary budget targets with flexible bands. In accordance with this approach, the budget bill has defined that the primary budget balance objective may vary by 28.8 billion reais up or down next year.
($1 = 4.9096 reais)