Brazil's fiscal situation will improve gradually

Significance

That followed a primary surplus equivalent to 0.5% of GDP in 2022. The negative result in 2023 was partly caused by exceptional circumstances, notably the early payment of government debts resulting from court decisions and the need to compensate states for a decision that lowered their tax revenues the previous year.

Impacts

• Finance Minister Fernando Haddad will continue to be an effective negotiator with Congress.
• With businesses seeking fiscal incentives, some will increase pressure on the government in the coming months.
• Haddad will continue to face pressure from sections of the government seeking to increase public spending.