BRASILIA (Reuters) – Brazil’s Finance Minister Fernando Haddad unveiled on Thursday a budget cut of 15 billion reais ($2.70 billion) for this year as the government struggles to meet its 2024 fiscal target.
According to Haddad, out of the total 15 billion announced on Thursday, 11.2 billion reais in expenditures will be blocked to comply with a fiscal framework rule that imposes a cap on annual spending growth.
Additionally, another 3.8 billion reais will need to be frozen due to the lack of agreement with the Senate on alternatives to payroll tax benefits approved by lawmakers, Haddad said. According to him, those funds could be unfrozen if a deal to offset revenue losses from the tax exemptions is reached.
Haddad’s announcement to the press followed a meeting with President Luiz Inacio Lula da Silva and preempted data that was set to be revealed on Monday, when the government will release its bimonthly revenue and expenditures report. Haddad said this was done to prevent leaks.
The government’s goal this year is to eliminate the primary deficit, which excludes interest payments, with a tolerance band of 0.25% of GDP, either up or down. This means the primary deficit could be close to 29 billion reais.
According to Haddad, the revenue and expenditure report will show a primary deficit near the upper limit of the tolerance band but still within the fiscal target.
($1 = 5.5647 reais)
(Reporting by Lisandra Paraguassu, Marcela Ayres and Luana Maria Benedito; Editing by Alistair Bell)
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