The costs of Brazil’s projected primary surplus

The country is set to record a primary surplus this year for the first time since 2013, but it will come with punishing budget cuts and spending chaos

budget treasury brazil surplus
Treasury Secretary Paulo Valle. Photo: Fabio Rodrigues Pozzebom/ABr

This year, the Brazilian government expects to record its first primary surplus since 2013. While being positive news for the country’s public accounts, the announcement also came with an extra BRL 2.6 billion (USD 500 million) budget freeze in order to meet public spending rules. A little more than a week until the first round of the general elections, the news could not have come at a worse time for President Jair Bolsonaro.

This scenario only underlines the government’s difficulty in dealing with the current fiscal anchor and casts doubt on the continuity of the current spending cap rule, which...

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