Business · Economy · 3 hrs ago
Senate fiscal office doubts Brazil can reach a 2027 primary surplus
Brazil’s Senate fiscal office says a 2027 primary surplus is unlikely under the current public-finance outlook.
The office says the government’s 2027 budget plan relies on optimistic assumptions about revenue and spending.
It also says newly announced measures could add 40 billion to 50 billion reais in spending, while economic growth is expected to slow and weaken revenue.
Mandatory spending is squeezing the budget room for investments and other flexible expenses, which the office says cannot be the only target for cuts.
The office argues that mandatory spending needs reform to slow its growth over time.
It projects that the current fiscal rule will lose effectiveness in 2028 as covered spending exceeds its limit.
The office says a credible adjustment plan could help lower borrowing costs and the projected public debt, which it estimates has an 81.6% chance of exceeding 90% of GDP by 2030.
Brazil’s Senate Independent Fiscal Institution says the government is unlikely to achieve a primary surplus in 2027 under the current fiscal outlook.
IFI director Alexandre Andrade urged the economic team to announce a fiscal adjustment plan as soon as possible to anchor market expectations.
The institution cited optimistic revenue and spending assumptions in the 2027 budget proposal, new expenses of 40 billion to 50 billion reais, and slower expected economic growth.
Andrade said rising mandatory spending is squeezing the budget room for discretionary expenses and that reforms to mandatory spending are needed.
IFI projections say the current fiscal framework will lose effectiveness in 2028 if spending subject to its limit exceeds that limit.
- Who
- Brazil’s Senate Independent Fiscal Institution (IFI), represented by director Alexandre Andrade.
- What
- The IFI says the government is unlikely to achieve a primary surplus in 2027 and calls for a credible fiscal adjustment plan.
- When
- The assessment was reported on October 30, 2026. It concerns the 2027 fiscal target.
- Where
- Brazil.
- Why
- The IFI cites optimistic assumptions for revenue and spending, new expenses, slower expected growth, and rising mandatory spending.
This story does not have two clearly opposing sides.
The IFI analyzed the 2027 budget proposal and identified what it described as optimistic assumptions for revenue and spending.
CNN Brasil reported the IFI’s assessment that the government would be unlikely to achieve a primary surplus in 2027.
The IFI expects slower economic activity and says new expenses of about 40 billion to 50 billion reais will need to be accommodated.
IFI projections say spending subject to the fiscal framework’s limit will exceed the limit, reducing the framework’s effectiveness.
- 2027 primary surplus
- The IFI says the government is unlikely to achieve it.
- New expenses
- About 40 billion to 50 billion reais.
- Discretionary expenses
- About 140 billion reais are described as potentially subject to cuts.
- Fiscal framework
- The IFI projects it will lose effectiveness in 2028.
- Public debt
- The IFI report gives an 81.6% probability of debt exceeding 90% of GDP by 2030.
What people are saying
In the absence of mandatory spending reform, simply changing the fiscal framework parameters will be of no use, because in a context like this, the rule would simply lose effectiveness sooner.
We identified quite optimistic assumptions, both in revenue and in spending.
It makes little sense to think of an adjustment on the spending side that affects only discretionary spending; mandatory spending needs to be reviewed.
The GDP should grow less, and this consequently affects revenue.