Brazil's Tebet says 2024 budget bill to include zero-deficit target, extra spending of $26.5 billion

Brazil's Planning and Budget Minister Simone Tebet attends a ceremony at the Planalto Palace in Brasilia
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SAO PAULO (Reuters) - Brazilian Planning Minister Simone Tebet said on Wednesday the 2024 budget bill that the government is set to send to Congress this week will include the previously announced goal of zeroing the country's fiscal deficit, in addition to a boost in public spending.

"We are not debating changing that target," Tebet told journalists after local media outlets reported the economic team was considering loosening the goal to accommodate higher public spending.

In a congressional hearing later on Wednesday, Tebet reiterated this commitment, highlighting that the proposed bill, set to be submitted to lawmakers on Thursday, will outline a 129 billion reais ($26.5 billion) increase in primary expenditures, which exclude the payment of public debt interest.

This calculation aligns with President Luiz Inacio Lula da Silva's new fiscal rules, which Congress passed earlier in August, imposing a more lenient ceiling on government spending, capped at 70% of any upswing in revenue but restricted to 2.5% above inflation. The previous cap limited spending growth to inflation from the previous year.

According to Tebet, 2024 expenditures will increase by 1.7% above inflation.

The minister also said that the extra spending room of 129 billion reais will predominantly be absorbed by mandatory allocations, leaving only 9 billion reais at the disposal of the executive branch.

($1 = 4.8650 reais)

(Reporting by Fernando Cardoso and Marcela Ayres; Editing by Kylie Madry and Cynthia Osterman)