Overview

• The TCU ruled that using the lower limit of the fiscal band as the parameter for releasing commitments is incompatible with the fiscal framework and the Fiscal Responsibility Law.
• Finance Minister Fernando Haddad said the government will appeal and asserted that the administration is pursuing the center of the target.
• The Treasury’s latest bimestral report projects a 2025 primary deficit of R$ 30.2 billion, which sits just inside the floor of the band at about R$ 31 billion after excluding roughly R$ 43.3–43.4 billion in precatórios.
• Economists estimate that enforcing the TCU’s interpretation this year could require around R$ 30 billion in additional contingenciamento, a move they say would be hard to implement late in the year and may need modulation or application from next year.
• The Finance and Planning ministries issued a joint note defending the band-based approach, said they had not been formally notified of the TCU decision, and reported no new freeze tied to the target as existing blocks total R$ 12.1 billion under the spending cap.