On Monday, President Luiz Inácio Lula da Silva’s government submitted the 2025 Budgetary Guidelines Law Project (PLDO) to Congress, revising Brazil’s fiscal forecasts.
Initially promising a fiscal surplus, the administration has now adjusted these projections to reflect current economic realities.
The 2025 fiscal target has shifted from an anticipated 0.5% GDP surplus to a balanced budget scenario.
The new approach allows deficit/surplus within 0.25% GDP margin, avoiding penalties for deficits up to 0.25%.
In 2025, net revenue is projected at R$2.320 trillion, with total expenses at R$2.349 trillion.
These calculations exclude R$39.9 billion (about $7.67 billion) in debt payments mandated by a Supreme Court ruling.
They project a possible R$10.8 billion (about $2.08 billion) surplus despite the balanced budget goal.
The forecast covers central government, Treasury, Social Security, Central Bank, excluding public debt interest expenses.
The PLDO also revises surplus goals for subsequent years. By 2026, the surplus target is reduced from 1% to 0.25% of GDP, amounting to a positive balance of R$33.1 billion (about $6.37 billion).
For 2027 and 2028, the targets are 0.5% and 1% of GDP, respectively.
These adjustments occur amidst economic challenges and legislative hurdles affecting fiscal policy revisions.
Recent changes in legislation have diminished their revenue-generating potential, affecting the goal of achieving a zero deficit by as early as 2024.
Finance Minister Fernando Haddad has emphasized the continuous structural deficit since 2015.
He underscored the importance of ongoing discussions with Congress to curtail public spending and boost revenue streams.
Economic Projections from the 2025 PLDO
The 2025 PLDO also outlines economic projections: it expects real GDP growth to reach 2.22% in 2024, 2.80% in 2025, and 2.58% in 2026.
Inflation, measured by the IPCA, should decrease from 3.50% this year to 3% in subsequent years.
In 2024, forecasters predict a 3.25% rise in the INPC, with stabilization at 3% expected through 2028.
Interest and exchange rate expectations predict that the average dollar rate will surpass R$5.00 by 2026.