LDO 2025: economic team aims for accounts in the black, but official estimate is still a deficit throughout the Lula government

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Estimate appears in the project sent to the National Congress; Forecasts for the coming years will still be revised. Text for 2025 needs to be approved by parliamentarians. The draft Budget Guidelines Law (PLDO) of 2025, sent to Congress this Monday (15) by the federal government, indicates that the economic team foresees fiscal losses for the country throughout the Lula government. The economic area aims at a reversal of the situation – and says it will aim for a fiscal surplus of 0.25% in 2026, that is, a positive result: collecting around R$33 billion more than it spends. In 2025, the goal became revenues equal to expenses. Zero deficit, but also zero surplus. Despite the goals for the accounts to return to the black, the latest official forecasts from the Ministries of Finance and Planning are that the accounts will have a deficit by 2026 — the last of the current administration. And they will return to a surplus only in 2027. Even with the estimate that the accounts will remain in the red throughout the Lula government, the economic team assesses that the targets will be achieved in the coming years as they are within the band (within the range predicted by the tax framework). Or the surplus could come from the reduction of court orders. Precatório are debts that the government has to pay and have already been recognized by the courts. If the government manages to advance these payments, it frees up space in the accounts for the following years. Goals The previous target, of a surplus in 2025, was changed. In other words, the government’s intention is to achieve the following results: 2024: zero deficit 2025: zero deficit 2026: surplus of 0.25%, around R$33 billion In terms of projections, the scenario is different. The government estimates that, if the current situation is maintained, the country will have: 2024: a R$9 billion shortfall; 2025: R$29.1 billion shortfall; 2026: R$14.37 billion shortfall. Haddad confirms the goal of zero deficit and that the minimum wage should be R$1,502 in 2025 Understand According to the proposal, the central goal is a zero balance in 2025. But the result of public accounts could oscillate between a deficit of R$31 billion and a positive balance of equal size, without the objective being formally breached. This is because there is a band in relation to the central target (of zero deficit), of 0.25 percentage points of the Gross Domestic Product (GDP), up and down. For 2026, the central target is a surplus of 0.25% of GDP — around R$33 billion. With the existing band, accounts could fluctuate between a zero balance and a surplus of R$66 billion. The government explains, in the LDO, that, in 2025 and 2026, ADIs 7064 and 7047 allow the exclusion of payment of court orders. As a result, these values ​​can be deducted from the result and, even with a deficit, the target would be reached in 2026. History of accounts and current target Between 2014 and 2021, Brazil had a deficit. In 2022, a surplus of R$54 billion was recorded. Last year, the accounts returned to the red, with a negative balance of R$230 billion. These numbers only involve the primary result — which does not consider government expenses with interest on public debt. The current target for government accounts in 2025, which has not yet been changed, is a surplus of 0.5% of GDP, around R$62 billion. The government, however, proposed changing to the zero deficit target – the measure still needs to go through the Legislature. With the reduction of the fiscal target by 0.5 percentage points of GDP in 2025, and with an additional flexibility of 0.75 percentage points of GDP in the following year, if approved, the space that the government can obtain for new public spending is around R$161 billion in the two years. What the economic team says Last week, the Minister of Finance, Fernando Haddad, already indicated that the target for 2025, of a surplus of 0.5 of GDP, was not feasible and would be changed. “We are running out of time to do the necessary calculations to set a feasible target in light of what has happened in the last year”, he declared in an interview with journalists at the ministry’s door”, said Haddad, at the time. According to calculations by the National Treasury , the economic team would need to increase revenue, through additional measures, by R$296 billion in 2025 and 2026, to meet the currently existing fiscal targets. Earlier this month, the Minister of Planning and Budget, Simone Tebet, admitted that. “The increase in the Brazilian budget from a revenue perspective is already running out, that is, through measures to increase revenue.” Going beyond this would mean increasing taxes. So far, what we have done is recover public revenues in Brazil without increasing taxes”, she declared at that time. Asked this Monday why the government is proposing changes to the fiscal targets for 2025 and 2026, the Secretary of the National Treasury, Rogério Ceron, stated that some measures adopted by the economic team to increase revenue “were slow to materialize.” “We spent a good part of the year discussing Carf, stoppages in trials at Carf, some measures that take time to mature. And the rest is a little of this conclusion that we reached in this review process. We had a structural deficit of more than 1% of GDP. But observing that we have a consistent trajectory. Just by maintaining the goals, they would have no effect, or generated the opposite effect. It’s better for the country to take steps in the right direction, controlling inflation, than making a move that could put everything in jeopardy,” Ceron told reporters.

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