Tippett says the government will have no new spending and is asking the market to convince Congress of the cuts

Minister of Planning and Budget, Simone TippettShe stated on Monday 24 this month that there will be no new public spending by the federal government in 2026. She added that despite this commitment, it will also be necessary to strengthen the spending reduction agenda, especially tax benefits.

“For 2026, I want to say, there will be no new public spending, but nevertheless, we need to go ahead with the reduction, even if it is linear, which is not ideal, but possible, in terms of tax spending,” she said during the party’s annual lunch. Brazilian Banking Federation (Febraban)in Sao Paulo.

In this context, Tippett stressed the need for more and more planning in the public budget and that Brazil needs to stop “dry ice” and become a “country of improvisation.” She gave as an example that the country spends a lot on education, but has one of the worst levels of public education in the world.

Financial market assistance

The Minister stressed the federal government’s commitment to financial responsibility and the balance between economic growth and controlling inflation. According to her, during the three years of the government so far, the executive branch has often tried to strengthen some points of spending control, but has faced difficulty in completing these reforms due to the power of lobby groups.

“On tax reforms, we moved much slower than we needed to. But in this regard, it is important to share responsibilities. The executive branch has tried. We have often had lobbyists preventing us from doing so. (executive) And there are other forces in which we can advance further.”

During his speech, Tippett also emphasized that the financial sector itself and banks could help convince Congress to reduce some expenditures. It mainly pointed to higher tax expenses and tax exemptions. He stressed: “Here you are, agents of the market, you can be partners with Brazil, as is the case with many already, and take the floor not only within the executive branch, but within the National Congress.”

The minister believes that it is not necessary to “hold back” economic growth with “fear” of inflation. “What we need is to create the conditions for equitable and sustainable growth. We should not be afraid to talk about control of public spending and fiscal responsibility.”

In this context, the Minister also defended the need for greater planning than ever before in the federal budget, citing, for example, the experience of Asian countries, where, according to her, countries set an example, through their ability to set medium- and long-term goals and direct investments on the basis of indicators and numbers. The minister stressed that “spending a lot is bad, but spending badly is worse,” stressing that it is necessary to invest in sectors such as science, technology and innovation and reduce “bad expenditures.”

Tippett also stressed during his speech that the country is ending the year 2025 much better than everyone imagined and the scenario that was drawn at the beginning of the year, despite some difficulties, the most important of which is the high level of interest rates. It also stated that Brazil’s potential GDP is no longer at 1.5% and needs to be reconsidered.