BRASILIA (Reuters) – Brazil’s government on Tuesday eased the total spending curbs previously deemed necessary to comply with fiscal rules, after raising its net revenue forecast by 27.1 billion reais ($4.87 billion) this year, according to its latest revenue and expenditure report.
The Finance and Planning ministries fully eliminated the spending freeze announced in May to meet this year’s fiscal target, which had totaled 20.7 billion reais.
The boost was driven mainly by an upward revision of 17.9 billion reais in projected revenue from natural resource exploration.
The report also slightly raised to 10.7 billion reais, from 10.6 billion previously, the spending block needed to comply with the cap on expenditure growth under the new fiscal framework approved during the administration of leftist President Luiz Inacio Lula da Silva in 2023.
As a result, the total amount of spending curbs – which had stood at 31.3 billion reais when including the now-reversed freeze – fell to 10.7 billion reais.
The higher estimate for public revenue follows congressional approval of a measure that clears the way for an extra oil auction involving uncontracted areas in the offshore pre-salt region, a move first reported by Reuters in April.
This year’s fiscal target is a primary deficit of zero, with a tolerance band of 0.25% of GDP in either direction. That means the government can post a primary deficit of up to 31 billion reais and still remain in compliance with the goal.
The government now forecasts a primary deficit of 26.3 billion reais, excluding nearly 50 billion reais in court-ordered payments, which the Supreme Court has ruled should not be included in the fiscal target calculation.
($1 = 5.5681 reais)
(Reporting by Marcela Ayres in Brasilia; Editing by Leslie Adler and Matthew Lewis)
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