Economic experts said that public service perks, inefficient tax incentives, and parliamentary amendments are blocking fiscal adjustment in Brazil [1].
These obstacles are critical because they inflate state expenditures and reduce the fiscal margin. Without addressing these structural costs, the government struggles to consolidate public accounts and maintain long-term economic stability.
During a discussion moderated by Denise Campos de Toledo, Manuel Pires, coordinator of the Center for Fiscal Policy and Public Budget at FGV IBRE, analyzed the current roadblocks [1]. Pires and other specialists, including economist Roberto Troster and AW Capital CEO Augusto Parente, said "penduricalhos" — a term used for supplementary benefits and perks in the public sector — are a primary driver of spending [1].
Beyond public sector benefits, the group said tax incentives that fail to produce intended results are a significant drain on resources [1]. These incentives reduce potential revenue without providing a proportional economic return to the country.
Parliamentary amendments also contribute to the problem by increasing public spending through mechanisms that often bypass strict fiscal oversight [1]. These allocations make it difficult for the executive branch to implement a cohesive spending plan.
Differing views exist on how this adjustment will be executed. Walter Maciel said the fiscal adjustment will be "no amor ou na porrada," suggesting a potentially conflictual implementation [2]. Conversely, Dario Durigan said the government will continue prioritizing the fiscal adjustment [3].
While some see the process as a clash of interests, others view it as a strategic political choice between increasing revenue and decreasing expenditure [4]. The consensus among the analyzed specialists remains that structural spending habits currently outweigh the government's ability to balance the books [1].
“Ajuste fiscal será “no amor ou na porrada”.”
Brazil's fiscal struggle is not merely a matter of accounting but a political conflict over entrenched privileges. The reliance on parliamentary amendments and public sector perks creates a rigid budget that resists traditional austerity measures. This suggests that any successful fiscal consolidation will require significant political capital to dismantle established interests within the legislative and civil service sectors.
