By Brazil Stock Guide – Brazilian Finance Minister Dario Durigan said the government aims to stabilize the country’s public debt by 2030 through primary surpluses of about 0.5% of gross domestic product, tighter control of mandatory spending and changes to existing fiscal rules.
Treasury projections that incorporate cost-containment measures under consideration indicate the debt trajectory could level off between 2029 and 2030, Durigan said Friday during the Expert XP conference in São Paulo, organized by XP Inc. (NASDAQ: XP).
Durigan described debt stabilization as the “touchstone” of the government’s economic policy. Reaching the target will require sustained fiscal discipline as automatic expenditures continue to squeeze the portion of the federal budget available for investment and other discretionary programs.
“That will require fiscal discipline, containment of mandatory spending and adjustments to the fiscal rules we have today,” Durigan said.
The minister also advocated adding an explicit public-debt trajectory to Brazil’s Budget Guidelines Law, known as the LDO. The measure would align annual fiscal targets more closely with the government’s medium-term debt strategy and strengthen the credibility of economic policy.
Brazil’s fiscal framework currently sets primary-balance targets but allows tolerance bands around the central goal. Durigan’s proposal would give debt dynamics a more prominent role in budget planning as the government seeks to convince investors that public liabilities can be brought under control without undermining essential services or infrastructure investment.
Mandatory expenditures are at the center of that effort. Durigan said the government needs to examine special pension arrangements for military personnel and civil servants, which are among the structural pressures on federal spending.
He also criticized compensation packages in the judiciary that exceed the constitutional public-sector salary ceiling, calling such payments “unacceptable.” According to the minister, the persistent rise in mandatory expenses reduces the resources available for public investment and limits the government’s ability to respond to economic and social priorities.
Durigan outlined three priorities for the post-election reform agenda: reducing the growth of mandatory spending, improving the efficiency of the state and completing the implementation of Brazil’s tax overhaul.
The Finance Ministry also intends to expand public-private partnerships to increase infrastructure and industrial investment while limiting the immediate burden on public accounts. Under the strategy described by Durigan, the government would focus resources on projects in which private investors are unwilling to assume all the risks.
He cited initiatives including the Climate Fund and Eco Invest Brasil, which are designed to mobilize private capital for sustainable projects. The government is also using public resources and partnerships with commercial banks to reduce foreign-exchange risks for selected investments.
“We provide foreign-exchange insurance with public money, with a public subsidy, in partnership with private banks, which select projects in specific areas — biofertilizers, critical minerals, artificial intelligence for industry,” Durigan said.
Political coordination will also be essential to the fiscal plan. The minister said the government had identified 25 congressional proposals considered potential “fiscal time bombs” because of their possible impact on revenue or spending.
After negotiations involving the president, the head of the Senate and the Supreme Court, only one of those measures was approved before Congress began its first-half recess, Durigan said.
“There are no fiscal time bombs expected ahead,” he said.
Durigan also linked economic stability to the preservation of democratic institutions and an orderly transfer of power. Comparing the current political environment with the previous presidential transition, he criticized attempts to reject election results and disrupt the constitutional process.
“You cannot refuse to recognize the election result, set the country on fire, flee and refuse to carry out the transition,” he said.
The minister rejected the idea that a minimal state would offer a solution to Brazil’s fiscal and economic challenges. He said the government remains essential in areas including public security, education, health care, diplomacy and infrastructure.
“The state has a role; there is no point denying it. And I think anyone who denies it is out of touch with reality,” Durigan said.
The tax overhaul, meanwhile, is expected to simplify compliance for companies and improve administrative efficiency. Together with tighter mandatory-spending rules and stronger primary balances, the reform forms part of the government’s effort to stabilize debt without withdrawing the state from services considered central to economic development.
Leave a Reply