Congress approves removal of up to R billion in defense spending from fiscal 2025 target cap

Congress approves removal of up to R$3 billion in defense spending from fiscal 2025 target cap


The project conceived by the leader of the PL in the Senate was approved in the Chamber this Monday evening, 3, with 360 votes in favor and 23 against, and now goes to presidential approval

BRASÍLIA – With 360 votes in favor and 23 against, the Chamber of Deputies approved, on Monday 3rd, a project conceived by the leader of the PL, Senator Carlos Portinho (RJ), which releases to government of Luiz Inácio Lula da Silva (PT) a space of R$ 3 billion in the fiscal target.

The text authorizes the deduction of expenses from projects in national defense of the calculation of the primary result target (the difference between expenditure and income, excluding debt interest) established in the Budget guidelines law and the spending limit of fiscal framework.

The proposal, already approved in the Senate, had the substitution General Eduardo Pazuello (PL-RJ) as speaker in the House. The parliamentarian spoke in favor of the project. The text now passes to presidential sanction.

According to the text, the Executive’s spending cap and limit for 2026 can exclude spending on these projects in the lesser of two amounts: R$5 billion or allocation by the New Growth Acceleration Program (CAP) under the responsibility of the Ministry of Defense and subject to the spending limit. But R$3 billion will be deducted from this amount for 2025.

Therefore, if the final budget allocation for these projects in the new CAP is R$4 billion in 2026, R$3 billion will be deducted, resulting in R$1 billion being excluded from the target and spending ceiling.

If the lower value is R$5 billion, the discount will result in R$2 billion for 2026 outside the fiscal cap and target.

The rule that excludes expenses for these types of strategic projects will be valid for five years, from 2026 to 2030, in addition to the specific rule relating to 2025. All expenses thus subtracted from the ceiling and target will be considered capital expenditure.




Public funds

According to the Chamber, projects that benefit from exceptions to the fiscal framework must contribute to the development of the Defense industrial base and can also be financed with resources from public funds linked to the Ministry.

The remaining debts related to such expenditures will not be counted in the primary result objective established in the respective Budget Guidelines Act (LDO), regardless of the exercise of its implementation.

The passive sums refer to the payment of expenses paid in previous years with financial resources coming from subsequent budgets.

Pazuello says there have been budget fluctuations in land border monitoring programs, conventional and nuclear submarines, frigates, armored forces, fighter jets and Embraer aircraft. During the vote, the leader of the PT Chamber, Lindbergh Farias (RJ)voted in favor of the project.

Source: Terra

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