Brazil freezes 5 billion reais in budget spending to curb fiscal deficit.

In response to the country’s fiscal pressures, Brazil's Minister of Finance, Fernando Haddad, announced on November 21 in Brasília that the government will freeze approximately 5 billion reais in the 2024 federal public expenditure budget. This decision was confirmed during the Budget Execution Committee (JEO) meeting held on the same day, aimed at strictly controlling the fiscal deficit and ensuring that the budget execution does not deviate from its set targets. Haddad emphasized that the specific amount frozen may fluctuate, but it is expected to be close to 5 billion reais. This measure is in line with the provisions of the Fiscal Year Budget Guidelines Law (LDO), which outlines the expected fiscal revenue targets.

Haddad further stressed that despite this freeze, Brazil's fiscal revenues remain within the expected range and will not impact the long-term commitment to achieving the "zero deficit" goal. He also dismissed speculation regarding potential adjustments to the deficit targets. According to Haddad, the government's confidence in meeting the fiscal target for this year remains strong, with a tolerance threshold for the deficit set at 28.75 billion reais.

The Ministry of Planning and Budget is set to release the "Bi-Monthly Public Finance Revenue and Expenditure Assessment Report" on November 22, which will provide further updates on the fiscal situation. According to earlier reports, the government successfully unfreezed 1.7 billion reais in budget funds, and some growth in tax revenue has reduced the forecasted basic deficit for 2024 to 28.3 billion reais, which is 4 billion reais lower than the minimum tolerance threshold. However, the government has not yet included the special credit allocation of 38.6 billion reais for post-flood reconstruction in Rio Grande do Sul and the 514 million reais in special expenditures for wildfire responses in the deficit calculations. If these special expenditures are accounted for, the 2024 basic fiscal deficit in Brazil is expected to rise to 68.8 billion reais.

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