News Regulatory Updates

Brazil Budget Highlights 2021

The Brazil Annual Budget Bill 2021 has been approved by the National Congress of Brazil on March 25, 2021. Now it will go on to presidential sanction. The Annual Budget Law (LOA) estimates the revenue and fixes the Union’s expenditure for the financial year 2021. 

Some of the features of Brazil’s budget for 2021 are as follows:

  • The approved budget has a fiscal deficit of BRL 247.12 billion for the Central Government for the year 2021 i.e., equivalent to 3.2% of Gross Domestic Product (GDP). In 2020, it was 10.06% of GDP.
  • It is expected that in 2023 the fiscal performance can be comparable to 2018, with the central government’s primary deficit reduced to 1.68% of GDP. However, Brazil’s Annual Budget Bill 2021 projects a real growth of GDP of 3.2% in 2021 and of 2.5% in 2022.
  • The preliminary report highlights that the Brazilian government has made tax waivers amounting to almost BRL 307.9 billion in 2021 (4% of GDP), which included exemptions from income tax, from COFINS and from the contribution to the General Social Security System.
  • Cancellation of Budget 2021 appropriations related to the settlement of urban and rural social security benefits (BRL 13.5 billion), salary allowance (BRL 7.4 billion) and unemployment insurance (BRL 2.6 billion) has been proposed.

Also, an additional BRL 200 million is provided for the development of the Brazilian vaccine against covid-19.