The loss of validity of the provisional measure that would tax investments, bets and fintechs and the growth of state-owned companies’ deficits will make it difficult to meet this year’s fiscal targets, warned the Independent Fiscal Institution (IFI). In a report released this Thursday (23), the agency found that the The government will need to make an additional fiscal effort of R$27.1 billion in the last quarter of the year.
The calculation considers legal deductions, such as court orders and other rebates, in addition to the tolerance of 0.25% of the Gross Domestic Product (GDP) in relation to the center of the target, as established by the new tax framework. Therefore, the government will need to save R$27.1 billion from October to December to reach the minimum limit of the fiscal target.
According to the fiscal framework and the 2025 Budget Guidelines Law (LDO), the government will have to end the year with zero primary deficit, potentially reaching a negative result of R$31 billion, considering the tolerance margin of 0.25% of GDP.
A technical body linked to the Federal Senate created in 2016, the IFI monitors and evaluates the federal government’s fiscal policy in an autonomous and transparent manner. According to the Fiscal Monitoring Report (RAF) 105, released this Thursday (23), the fiscal scenario worsened due to the worsening of the primary deficit of state-owned companies and the loss of effectiveness of Provisional Measure nº 1,303/2025, whose processing was interrupted on October 8.
The Chamber of Deputies rejected sections of the MP that would increase revenue through the taxation of Agribusiness Letters of Credit (LCA) and Real Estate (LCI), electronic betting, fintechs and rules on tax credits. The Ministry of Finance was counting on these revenues to meet fiscal targets for 2025 and 2026.
The IFI assesses that new negotiations will be necessary to restore the balance of the Union’s public accounts this and next year.
Income Tax Reform
The report also analyzed the effects of income tax reform, currently being processed in Congress. The proposal exempts taxpayers with incomes of up to R$5,000 per month, reduces the burden for those earning between R$5,000 and R$7,350 and creates a minimum tax on high incomes to maintain the measure’s fiscal neutrality.
According to the IFI, the original text of the project would bring an estimated tax gain of R$9 billion per year, but this effect was reduced to R$4 billion after changes in the Chamber’s Special Committee. In the text approved in plenary, the impact became negative by R$1 billion per year. The proposal is under analysis in the Federal Senate.
Limits on public debt
Another topic covered in the report is Senate Resolution Proposal No. 8/2025, which seeks to regulate provisions of the Federal Constitution and the Fiscal Responsibility Law, establishing limits for federal public debt. The Economic Affairs Committee (CAE) began discussions with public hearings, with the participation of the IFI.
The report highlighted that the Legislative Branch has acted on other fiscal responsibility issues. The IFI cites the recent promulgation of Constitutional Amendment No. 136/2025, which defines limits for the annual payment of court orders by states and municipalities and creates rules for renegotiating social security and contractual debts. From 2027 onwards, the constitutional amendment removes the payment of court orders from the Union’s expenditure limits and partially removes this expenditure from the determination of the central government’s fiscal target.
At the opening of the report, IFI directors Marcus Pestana and Alexandre Andrade highlighted that the challenge of rebalancing public accounts remains a national priority.
“Equating fiscal policy must be a shared mission between the Executive and Legislative Branches. Even the Judiciary Branch makes decisions with extremely relevant fiscal impacts”, they stated.
