Congress needs to approve R$17.9 billion in measures that increase government revenue, equivalent to 0.1% of the Gross Domestic Product (GDP, sum of the wealth produced in the country), so that the government reaches the goal of zero deficit next year. The estimate was released this Monday (16) by the National Treasury, which published the Fiscal Projections Report for 2025.
According to the document, the extra R$17.9 billion can be obtained both through the approval of measures stopped in Congress and by sending new projects. At the end of August, the government forwarded a bill to increase the Social Contribution on Net Profit (CSLL) and Interest on Equity (JCP) rates. The measure would yield R$21 billion to federal coffers, but it stopped being processed in Congress and is not expected to be approved.
For this and next year, the fiscal framework establishes a target of zero primary deficit, with a tolerance margin of 0.25 percentage points of GDP for more or less. In 2024 values, this is equivalent to the possibility of a result that is between a surplus of R$28.75 billion or a deficit of the same amount. The primary result represents the difference between government revenues and expenses without interest on public debt.
The report also estimated the fiscal effort needed for 2026, 2027 and 2028. In these years, the government estimates a primary surplus target of 0.25% of GDP, 0.5% of GDP and 1% of GDP, respectively. To achieve these results, the government will need to increase revenue by 0.7% of GDP, 0.8% of GDP and 1.0% of GDP, respectively in these years, with an average increase of 0.8 percentage points in three years .
These percentages consider gross revenue, before the Union transfers part of the resources to states and municipalities. The calculations, however, disregard late payment of court orders in 2025 and 2026, which are outside the fiscal target by decision of the Federal Supreme Court (STF).
The report did not consider the spending cut package recently sent by the government to Congress. This is because proposals can only be included in official projections after approval by parliament.
According to the Treasury, the additional fiscal effort could be achieved “from a combination of several measures, such as additional revenue measures, spending reviews, reducing the linkages between expenses and revenues, executing expenditure below the financial limit (pooling), contingency measures, among others”. The document, however, considered maintaining spending at the level permitted by the fiscal framework.
Income and expenses
According to the report, expenditure will grow at the framework’s ceiling, of 2.5% per year above inflation, until 2034. In the previous document, published in March, the Treasury predicted average real growth (above inflation) of 2.2% over the next ten years.
In comparison with GDP, total primary expenditure, currently around 19% of GDP, will fall less, reaching 16.9% of GDP in 2034. The March report estimated that spending would reach 16.3% of GDP in same deadline.
The discretionary (non-mandatory) expenses of the Executive Branch will fall from 1.7% in 2024 to 0.9% in 2034. The reduction, however, will not result from improved government management, but from the growth in mandatory spending, which will increase until it consumes almost the entire spending limit of the fiscal framework.
According to the report, discretionary expenses have been at the same level in relation to GDP since 2023, as a proportion of GDP, around 1.7% of GDP, falling 0.4 percentage points in 2027 with the inclusion of court orders in the expenditure limit . This is because, with the end of the STF decision, court orders will be included in the framework’s spending limit.
Public debt
According to the report, general government gross debt (DBGG), the main indicator used for international comparisons, will only stabilize in 2027, when it will reach 81.8% of GDP. The most recent official projection, from the 2025 Budget Guidelines Bill (PLDO), indicated that the DBGG would stabilize in 2027, at 79.7% of GDP.
The indicator should reach 77.7% of GDP at the end of the year, against a forecast of 76.6% estimated in the PLDO. In 2028, according to Treasury projections, DBGG will begin to fall, reaching 75.6% of GDP in 2034.
The scenario, however, will require an even greater fiscal effort from the government in the coming years. To stabilize the debt at 81.8% in 2028, a primary surplus of 0.7% of GDP in that year will be necessary. To reduce debt by 2034, resource savings will have to rise to 1.3% per year, a greater effort than predicted in the reference scenario.
