Weekly Report - 20 April 2023 (WR-23-16)

Government spending for 2024 was projected at R$172bn (US$34.1bn), although the MP admitted that this estimated limit on spending would not work without approval of the new fiscal framework, a set of fiscal discipline rules which would limit the growth of expenditure in any given year to 70% of the rise in revenues.

In a press conference on 17 April, the planning minister, Simone Tebet, highlighted the importance of the fiscal framework, stating that “if we do not approve the framework, we will not have resources for Minha Casa, Minha Vida, for roads, for basic education, for basic health treatment, Farmacia Popular, among many other programmes”. The bill for the fiscal framework was submitted to congress on 18 April and a vote on the bill is expected to be held by 10 May.

Since these upcoming rules and guidelines on spending depend on the country’s GDP, boosting economic activity would be essential to ensuring the government has enough to finance its policy agenda. However, the latest data from Brazil’s central bank (BCB) showed a slight contraction in economic activity.

The IBC-Br index, a leading indicator of GDP, for February fell by 0.04% on the previous month. The national statistics institute (Ibge) also found a monthly decline (-0.2%) in industrial production for February. 

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