By Marcela Ayres and Bernardo Caram
BRASILIA (Reuters) – The Brazilian authorities is getting ready to roll out measures to curb obligatory spending after a second spherical of municipal elections on the finish of the month, two Finance Ministry officers instructed Reuters.
President Luiz Inacio Lula da Silva has centered largely on restoring the nation’s fiscal steadiness with extra tax income since he took workplace final yr.
Nevertheless, the sources say his authorities is now spending controls to hit funds targets and stabilize gross debt under 80% of gross home product (GDP).
Buyers and personal economists have been skeptical of Lula’s skill to ship on funds guarantees, with rates of interest rising in Brazil and the leftist president cautious of belt-tightening as current polls present his reputation beneath strain.
Lula reiterated in a Friday radio interview that he goals to broaden an revenue tax exemption for poor Brazilians, vowing to satisfy that election promise by the tip of his time period in 2026.
That exemption has garnered consideration after newspaper Folha de S. Paulo reported that the federal government might elevate taxes on millionaires to offset its estimated 35 billion reais fiscal influence.
Nevertheless, one of many sources mentioned the federal government’s financial crew sees the introduction of spending controls as extra pressing. A second supply from the ministry mentioned the containment of obligatory bills is meant to strengthen Brazil’s fiscal framework, creating room for discretionary spending.
The speedy enlargement of obligatory bills equivalent to public salaries and pensions is squeezing out investments and different packages on account of a spending cap imposed beneath the brand new framework.
After beginning to management bills by cleansing up public registries and tackling fraud in social packages, the federal government is now getting ready initiatives that may require congressional approval, the primary supply mentioned.
The preliminary bundle, centered on particular expenditures, will probably be adopted by a second, “more durable” set of extra structural proposals, the supply added, with out giving particulars.
Since final month, authorities officers have mentioned the foundations governing the so-called BPC program are beneath scrutiny. That profit – Brazil’s second-largest social program – is aimed toward seniors over 65 and folks with disabilities whose per capita family revenue is usually lower than 1 / 4 of the minimal wage.
The 2025 funds invoice allocates 112.9 billion reais for this system, a rise of 12.7% from this yr.
($1 = 5.61 reais)