By Jeffrey T. Lewis
SÃO PAULO–Brazil’s government will limit spending increases to 70% of revenue increases and aim to balance its primary budget next year, the finance ministry said Thursday in a document with details about the country’s new fiscal framework.
The framework defines the rules the administration of President Luiz Inácio Lula da Silva must follow as it works to boost economic growth and government investment while trying to keep deficits and debt under control. The left-wing Mr. da Silva’s spending priorities have raised concern among investors and the Central Bank of Brazil over the impact they’ll have on inflation.
The spending limit means that the government can increase spending every year by 70% of the amount that revenue increased the previous year. The government hopes to reduce its primary budget deficit to 0.5% of gross domestic product this year. The primary budget balance excludes interest payments from the calculation and is a measure of a government’s ability to reduce debt.
The administration’s goal is to have a balanced primary budget in 2024, a primary surplus of 0.5% of GDP in 2025 and a primary surplus of 1.0% of GDP in 2026, the final year of Mr. da Silva’s current term in office.
Write to Jeffrey T. Lewis at [email protected]
(END) Dow Jones Newswires
03-30-23 1036ET
