Brazil’s Congress has approved a 2025 budget bill forecasting a primary surplus of 15 billion reais. This is an increase from the prior estimate of 3.7 billion reais. Key amendments were made to enhance social benefit spending, and the bill requires President Lula’s approval to become law.
On Thursday, Brazil’s Congress approved the 2025 budget bill, projecting a primary surplus of 15 billion reais ($2.66 billion) for the central government, a considerable increase from the previously forecasted surplus of 3.7 billion reais in August. This improvement is attributed to revised upward revenue projections, as detailed in the bill sponsored by Senator Angelo Coronel. The bill now awaits the signature of President Luiz Inacio Lula da Silva to become law.
In 2023, President Lula introduced a new fiscal framework, establishing a primary balance target alongside a spending growth cap of 2.5% above inflation. For this fiscal year, the target includes a zero primary deficit with a permissible margin of 0.25% of gross domestic product, allowing for a deficit up to 30.9 billion reais while adhering to guidelines.
Senator Coronel indicated that he made modifications based on federal government requests, which included increased funding for social security benefits while reducing allocations towards the Bolsa Familia welfare program that provides monthly cash transfers. The customary timeline for approving the annual budget before the end of the prior year was disrupted this year, reflecting the challenges encountered by Lula’s leftist government in managing relations with Congress.
In summary, Brazil’s Congress has approved a 2025 budget bill projecting a significant primary surplus, indicating improved fiscal management. The bill reflects adjustments in revenue and addresses social spending priorities, although its delayed approval highlights ongoing challenges within President Lula’s administration and Congress. The next step is formal ratification by the President to implement these fiscal strategies.
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