Government Considers Making Budget Freezes Permanent

The federal government is analyzing measures to tighten the fiscal framework and control the trajectory of public debt. The main proposal suggests that budget freezes implemented during the year should permanently reduce spending limits for subsequent fiscal years.

Currently, the freezing of ministry funds is only temporary. With the proposed change, fiscal space would remain restricted even after a potential improvement in tax revenue. The economic team is also discussing the possibility of freezing mandatory expenses that currently enjoy legal protection.

Another point under review involves changing primary result targets. The goal is to require the government to aim for the center of the established target instead of using the lower tolerance margin. In 2027, this change would require a surplus of 8.5 billion reais.

The revision of these rules follows negative reactions from financial markets, characterized by a stock market decline and rising future interest rates. Investors are pushing for concrete measures to ensure the balance of public accounts and long-term debt stability.

The proposals still depend on presidential approval and may require amendments to legislation or the Constitution. The economic team is seeking alternatives to adjust the budget in the face of rigid mandatory spending.