Brazil's new fiscal framework targets a zero primary deficit in 2024, followed by surpluses in subsequent years, as President Luiz Inacio Lula da Silva seeks a sustainable trajectory for the country's public debt, government sources told Reuters on Wednesday.
The primary surplus will be equivalent to 0.5% of GDP in 2024, rising to 1% of GDP in 2025, one of the sources said. The new framework will combine a target for primary results with a spending rule and will have adjustment mechanisms in case of noncompliance.
The sources spoke anonymously because the topic is being addressed in private conversations with members of Congress. The framework is needed to ease fiscal concerns after Lula secured congressional approval for a multi-billion-real package that bypasses the constitutional spending cap so his government can boost social spending and fulfill campaign promises.
Earlier on Wednesday, Institutional Relations Minister Alexandre Padilha said the government was finalizing the new rule, adding that Lula and Finance Minister Fernando Haddad would meet to do so. Haddad is expected to present it to leaders of the lower house of Congress later in the day.
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