Brazil’s fiscal framework: watch Finance Minister’s presentation video on new rules
Brazilian Finance Minister Fernando Haddad attended a press conference Thursday (30) to present the new plan to control public spending that should replace the spending cap rule.
The new details of the proposal influenced financial market assets such as interest rates, stock exchange, and exchange rates.
On Thursday, the Ibovespa rose by 2% due to investors’ expectations with the new fiscal plan.
The high, however, was reduced and was 1% around 11:22 am (Brasília time).
The dollar, which started the week at R$5.30, was negotiated at R$5.14.
According to the Ministry of Finance presentation, the fiscal target will have “tolerable” variation bands.
The current spending cap will have a band with real growth of primary expenditure between 0.6% to 2.5% per year.
The annual growth within the expenditure growth band will be limited to 70% of the variation of primary revenue in the last 12 months.
According to the Treasury, the primary result above the ceiling band allows the use of the surplus for investments. There will be, however, a floor for this.
“If the government’s efforts to increase revenue and reduce spending result in primary below the band, it forces a reduction of spending growth to 50% of revenue growth in the following year,” says the text.
The document also points out that the fiscal plan foresees a reduction of R$360 billion in debt interest until 2031.
The Treasury sees the gross debt between 73.58% and 74.36% of GDP in 2026.
The financial market has been waiting for this announcement since before the last Monetary Policy Committee (Copom) meeting, which decided last week to maintain the Selic rate at 13.75% per year.
The expectation was that a “solid and credible” framework would contribute to softening the tone of the monetary authority in its fight against inflation.
Check the broadcast of Fernando Haddad and Simone Tebet‘s press conference on the fiscal framework below:
With information from Bloomberg
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Brazil — Live Market Board
+0.30%
175,664.62
+0.30%
65,561.46
-0.41%
11,445.90
-0.22%
2,979,472
-0.72%
2,457.87
-1.28%
60,779.49
-1.40%
| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 175,664.62 | +0.30% | +21.85% | 175,135.41 | 168,310 | 167,142 | — |
| USD/BRL | 5.16 | +0.01% | -5.13% | 5.16 | 5.18 | 5.14 | — |
| SELIC | 14.00% | — | — | — | — | — | |
| PETR4 | 41.64 | -0.05% | +35.19% | 41.66 | 41.97 | 41.15 | 41,499,400 |
| VALE3 | 72.97 | +0.83% | +30.75% | 72.37 | 73.54 | 72.66 | 17,658,000 |
| ITUB4 | 38.60 | -1.03% | +4.57% | 39.00 | 39.34 | 38.39 | 29,487,800 |
| BBDC4 | 16.85 | +0.36% | +3.50% | 16.79 | 16.90 | 16.67 | 19,416,900 |
| BBAS3 | 19.37 | +0.47% | +0.73% | 19.28 | 19.44 | 19.16 | 11,069,200 |
| B3SA3 | 14.26 | -0.21% | +12.73% | 14.29 | 14.47 | 14.11 | 33,037,800 |
| ABEV3 | 14.89 | -0.80% | +21.91% | 15.01 | 15.07 | 14.81 | 16,453,100 |
| WEGE3 | 47.59 | +0.49% | +29.99% | 47.36 | 48.08 | 47.36 | 3,364,600 |
| PRIO3 | 59.14 | -0.19% | +50.67% | 59.25 | 59.81 | 58.74 | 3,325,600 |
| SUZB3 | 41.33 | +2.35% | -23.55% | 40.38 | 41.48 | 40.35 | 3,914,900 |
| RENT3 | 34.68 | -0.09% | +0.84% | 34.71 | 34.96 | 34.35 | 7,979,100 |
| AZZA3 | 15.89 | -2.63% | -53.76% | 16.32 | 16.42 | 15.82 | 1,330,300 |
| CSNA3 | 4.30 | +0.47% | -42.65% | 4.28 | 4.41 | 4.26 | 10,076,100 |
| GGBR4 | 24.69 | +2.19% | +51.38% | 24.16 | 24.85 | 24.18 | 7,047,600 |
| ENEV3 | 24.21 | -1.38% | +70.49% | 24.55 | 24.64 | 23.99 | 9,297,000 |
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