Revenues will have to rise BRL 17.9B to bring deficit to zero by 2025
The Brazilian Congress needs to approve BRL 17.9 billion in measures to improve government revenue—the equivalent of 0.1 percent of Brazil’s GDP in order to bring the deficit target to zero next year. The estimate was released on Monday (Dec. 16) by the National Treasury, which published its fiscal projections report for 2025.
According to the document, the extra BRL 17.9 billion can be obtained either through the approval of measures that have stalled in Congress or the submission of new projects.
For this year and the next, Brazil’s fiscal rules establish a primary deficit target of zero, with a tolerance margin of 0.25 percentage points of the GDP higher or lower. In 2024 values, this is equivalent to a potential result of plus or minus BRL 28.75 billion. The primary result represents the difference between government income and expenditure without interest on the public debt.
The report also estimates the fiscal effort needed for 2026, 2027, and 2028. In these years, the government estimates a primary surplus target of 0.25 percent of the GDP, 0.5 percent of the GDP, and one percent of the GDP, respectively. To achieve these results, the government will need to raise revenue by 0.7 percent of GDP, 0.8 percent of GDP, and 1.0 percent of GDP in those years, with an average increase of 0.8 percentage points over three years.
These percentages take gross revenue into account, before the federal government transfers part of the funds to the states and municipalities.
The report does not take into account the package of spending cuts recently sent by the government to Congress, as proposals can only be included in official projections once they have been approved by parliament.
In short, according to the Treasury, the additional fiscal effort could be achieved through a combination of measures, such as additional revenue measures, spending reviews, reducing links between spending and revenue, and contingency measures. The document, however, considers the maintenance of spending as within the level allowed by the fiscal regime.
