Federal government spending will grow 2.5% above inflation in 2025, according to next year’s budget bill, sent to the National Congress this Friday (30). The expansion is equivalent to the 2.5% real growth ceiling (above inflation) defined by the new fiscal framework.
The fiscal framework allows expenditures to grow above inflation, within a range between 0.6% and 2.5%. The percentage of real growth (above inflation) is linked to revenues. This is because the new fiscal framework establishes that expenditures must increase by up to 70% of the real increase in revenues in the 12 months ending in June of the year prior to the Budget. For 2025, the inflation calculation period will be valid between July 2023 and June 2024.
Since the budget proposal foresees revenue growth of 5.78% above inflation next year, the real increase in expenses, when applying the percentage of 70% of revenue growth, would be 4.04%. The new ceiling limits the expansion to 2.5%.
In absolute terms, the 2025 Budget proposal foresees R$2.908 trillion for primary revenues. This is equivalent to 23.5% of the Gross Domestic Product (GDP, the sum of wealth produced in the country). In turn, the total primary expenditures of the Central Government are projected at R$2.386 trillion (19.3% of GDP).
