Brazil’s Senate passed a legislative project on Thursday to cap public spending and achieve savings between 50,000 billion and 60,000 billion reais—amounting to approximately 9,000 billion to 10,000 billion dollars—by 2027.
The new legislative measure cleared the upper house with 45 votes in favor and 31 against. The approval arrives as President Luiz Inácio Lula da Silva prepares to take office for a fourth mandate in two months, facing intense pressure from financial markets to implement stringent fiscal cuts following a period of expanded state expenditure.
Planning Minister Bruno Moretti announced the projected savings figures on Wednesday inside the parliament in Brasília. He explained that the legislative package combines strategies to boost state revenue alongside structural steps to rationalise expenditures.
“We will protect those expenses that are crucial to guarantee rights,” Moretti said, according to Efe.
The approved framework restricts the real annual growth of public spending to 2%, placing it below current budget thresholds. Corporate tax exemption removals will account for much of the anticipated fiscal reduction.
Recent years have seen Brazil’s public debt climb past 92% of the gross domestic product, while the fiscal deficit hovers near 9.5% of GDP. The unexpected electoral outcome two weeks prior triggered a sharp drop on the São Paulo Stock Exchange, intensifying scrutiny over the incoming administration’s fiscal discipline.
Addressing the public directly in a nationwide broadcast on Sunday, President Lula discussed these financial indicators. “The evolution of the public debt and high interest rates concern me; for this reason, I reaffirm my commitment to fiscal responsibility, in order to make sustainable social policies possible and the much-needed increase in investment,” Lula said.
Responding to critics labeling his administration a spender of public funds, the president added, “All this effort will be carried out preserving fiscal rules.”
Senator Flávio Bolsonaro, who campaigned on pledges to slash public expenditures, voted against his usual alignment by supporting the measure remotely.
Bolsonaro cast his remote ballot from the United States, where he relocated two days following his defeat in the presidential election.
Speculation surrounds potential candidates for the Ministry of Hacienda, though the president typically delays such personnel announcements.
