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Congress Must Act: Brazil Faces Budget Gaps For 2026-2028
(MENAFN- The Rio Times) The Brazilian Treasury has issued a clear warning: without Congressional approval of new revenue measures, the government is unlikely to meet its fiscal targets for 2026 to 2028.
For 2025, the government expects to balance the budget, even if Congress doesn't deliver the R$ 46.7 ($8) billion proposed in pending revenue measures.
However, fully hitting the fiscal target will still require an additional R$ 17.9 billion-equivalent to 0.1% of GDP. This gap underscores the importance of coordinated action between the executive branch and Congress.
The Treasury's "Baseline Scenario" assumes that extraordinary revenues will generate R$ 121.5 billion in 2025. These revenues include collections from government programs and administrative councils.
The assumption holds true without Congressional intervention. While helpful, this reliance on one-off or non-legislative measures highlights a fragile fiscal strategy.
Looking ahead, the fiscal targets are tightening. The government aims for primary surpluses of 0.25% of GDP in 2026, 0.5% in 2027, and 1% in 2028.
Achieving these goals will demand new revenue measures adding 0.7%, 0.8%, and 1% of GDP each year. That means Congress's role in approving changes to payroll tax exemptions and corporate tax rates is critical-and uncertain.
Failure to meet these targets could trigger automatic spending caps under Brazil 's new fiscal framework, potentially freezing public sector salaries and restricting funding for essential services.
Beyond the immediate budget implications, missing these goals risks undermining economic stability, deterring investment, and slowing growth.
For 2025, the government expects to balance the budget, even if Congress doesn't deliver the R$ 46.7 ($8) billion proposed in pending revenue measures.
However, fully hitting the fiscal target will still require an additional R$ 17.9 billion-equivalent to 0.1% of GDP. This gap underscores the importance of coordinated action between the executive branch and Congress.
The Treasury's "Baseline Scenario" assumes that extraordinary revenues will generate R$ 121.5 billion in 2025. These revenues include collections from government programs and administrative councils.
The assumption holds true without Congressional intervention. While helpful, this reliance on one-off or non-legislative measures highlights a fragile fiscal strategy.
Looking ahead, the fiscal targets are tightening. The government aims for primary surpluses of 0.25% of GDP in 2026, 0.5% in 2027, and 1% in 2028.
Achieving these goals will demand new revenue measures adding 0.7%, 0.8%, and 1% of GDP each year. That means Congress's role in approving changes to payroll tax exemptions and corporate tax rates is critical-and uncertain.
Failure to meet these targets could trigger automatic spending caps under Brazil 's new fiscal framework, potentially freezing public sector salaries and restricting funding for essential services.
Beyond the immediate budget implications, missing these goals risks undermining economic stability, deterring investment, and slowing growth.
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