Budget woes leave Brazil unable to make investments entering 2021

In a perfect world, governments finalize their budgetary priorities for the following year around July, allowing ample time for the actual budget to be drafted and approved. But the realm of Brazilian politics rarely coincides with the perfect world, especially during the presidency of Jair Bolsonaro, whose time in charge has been defined by his catastrophic relationship with Congress. And in 2020, the so-called Budgetary Directives Law (LDO) was passed by lawmakers on Wednesday, just days before Congress packs up and goes home for the end of the year. 

Approving the measure guarantees that Brazil will avoid a government shutdown in January — but the country will enter 2021 with serious spending constraints and doubts over its solvency.

The LDO is just step one in the process of passing a federal budget. Having it in the bag will allow the government to spend one-twelfth of its 2020 budget every month, until approving a plan for 2021. But until next year’s actual financial blueprint passes, the government will be unable to make any new investments. 

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