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Fiscal Pressures May Increase Further This Week

BRAZIL
  • Following the loosening of the 2025 fiscal targets, O Globo is reporting that there could be more disappointing fiscal news on Thursday, with congress apparently leaning towards overturning a presidential veto that reduced parliamentary budget amendments by as much as BRL 5.6bn. In addition, there are also doubts over the bill to gradually restore the payroll tax exemption, which O Estado say could be discussed this week. Given these risks, some members of the government are apparently considering asking for a postponement of this week’s session.
  • Earlier, Planning and Budget Minister Simone Tebet said that ideally the fiscal targets would not be changed, but that the core of the fiscal framework will remain in place. Nonetheless, Brazilian assets remain under pressure today, with USDBRL extending the move higher and currently 1.4% up on the day, while swap rates are now more than 20bp higher across much of the curve.

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