“I regret having believed that PT would be fiscally serious”, says Stuhlberger

In a very critical tone, the CEO and CIO of the renowned manager Verde Asset Management, Luis Stuhlberger, expressed regret for having believed that the government of President Luiz Inácio Lula da Silva (PT) would be able to adopt a slightly more controlled stance in relation to the balance of public accounts throughout his mandate.

“I regret having believed that the PT could at least have some fiscal seriousness”, stated the executive during an event organized by the manager this Tuesday (7).

Disappointment with the current Government gained strength after the change in the primary surplus target for 2025 and 2026, announced last month. “This 2025 PLDO was a ‘game changer’ huge amount of what to expect from this government in fiscal terms”, highlighted Stuhlberger.

The executive highlighted that the fiscal framework had become a “piece of fiction” and that now what he thought was “noise” became “signal”. “We are back to the risk of the inspector and the great ease of changing the framework has put its credibility into question”, he summarized.

On April 15th, the Central Government’s primary result target in 2025 stopped being a surplus of 0.5% of the Gross Domestic Product (GDP) and moved to a framework of balance between revenues and expenses (zero deficit).

As the new fiscal framework allows a tolerance band of 0.25 percentage points up or down, the new objective would allow a deficit of up to 0.25% of GDP next year without the government incurring non-compliance − which would result in sanctions and the activation of fiscal triggers.

The 2025 PLDO also revised the promise of the 2026 primary result, the last year of the current government. In this case, the target goes from a surplus of 1% of GDP to 0.25% − which is equivalent to a positive balance of R$33.1 billion for revenues compared to expenses.

In the Government’s calculations, expenditure growth projections would reach 2.5% and 2.6% in 2025 and 2026, respectively. Verde estimates, however, that, if those entering Social Security and the payment of the Continuous Payment Benefit (BPC) continue to grow at the current rate, this increase in expenses would go to 3.4% and 3.7%, in that order, in 2025 and 2026.