Source : Reuters (illustrative graphic)
BRASILIA, November 11, 2026 – Brazil’s government proposed new ways to curb spending on Wednesday as part of a package that Planning Minister Bruno Moretti said was expected to improve the public finances by up to 60 billion reais ($10.8 billion) next year, Reuters reported.
Moretti told a congressional hearing that the package is expected to have a fiscal impact of 50 billion to 60 billion reais in 2027, with larger savings in the following years. He said the measures would give the government more tools to curb spending and review tax expenditures, according to Reuters, and Brazilian broadcaster CBN reported the same estimate.
One of the measures would pave the way for additional budget freezes if needed. Under the proposal, a freeze could be applied even when the projected primary result falls between the floor of the fiscal target’s tolerance band and its centre. At present the government aims only for the floor, Reuters reported. Triggering that freeze would also limit real growth in federal spending to 2% a year, below the 2.5% cap set under the current fiscal framework.
The package also proposes an across-the-board reduction in tax breaks, Moretti said. O Globo reported that the linear cut in tax incentives would rise from 10% to 20%. Whenever the additional freeze is activated, the government could also limit the use of tax credits to offset tax liabilities, with the details to be set later by government decree, according to Reuters. Moretti said these steps would provide an extra buffer of roughly 50 billion reais, while proposals to cap certain expenditures would bring the total estimated impact to 60 billion reais.
Other provisions include a delay to payments owed to states and municipalities under the Kandir Law agreement: annual transfers would fall to 1 billion reais until 2030, from 4 billion reais a year at present, with the remaining balance pushed to 2031–2037, Reuters and O Globo reported. Spending on export-financing interest equalisation under the Proex programme would be capped at 1 billion reais a year, and the bill would allow the use of up to 40% of the previous year’s financial surplus of funds to cover constitutional expenses.
The text would also exclude unexpected oil revenue from the calculation of the government’s net current revenue, which is the basis for setting the minimum spending on health. In practice, that makes the annual increase in the mandatory health floor smaller, Reuters reported. Moretti argued that oil revenue had grown exceptionally because of higher fuel prices caused by the conflict in the Middle East and is not a continuous source of income, G1 reported.
Moretti said the package would safeguard the government’s target of a primary surplus equivalent to 0.5% of gross domestic product next year and accommodate President Luiz Inácio Lula da Silva’s campaign spending pledges. The target includes a tolerance band of 0.25 percentage points of GDP in either direction, Reuters noted, and under the fiscal framework the government can exclude about 65 billion reais of spending from the calculation in 2027.
Senator Jaques Wagner of Lula’s Workers’ Party presented the bill in the Senate on Wednesday, G1 reported. O Globo reported that Senate President Davi Alcolumbre decided to leave the analysis of the bill until Thursday. The measures still need approval from Congress before they take effect.
Credit : Reuters’ X
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