Brazil Finance Minister proposes measures to combat deficit and inflation

Brazilian Finance Minister Dario Durigan has outlined several economic measures and perspectives aimed at addressing fiscal challenges and inflation. To combat the Social Security deficit, Durigan proposed combating ‘pejotização’—the practice of hiring workers as legal entities rather than formal employees—by potentially setting limits on the proportion of such contractors within companies.

Addressing inflation, Durigan attributed recent price pressures to external factors, specifically citing the conflict in the Middle East involving Iran as a driver for higher fuel and fertilizer costs. He rejected claims that government spending is the primary cause of inflation. Additionally, he announced plans for a decree to zero the Industrialized Products Tax (IPI) to support industry and mentioned a projected minimum wage of R$ 1,741 for next year.

On the fiscal front, Durigan noted that President Lula has presented a proposal to Congress to revise military pensions to address distortions. He also defended the current fiscal framework, despite criticism from Senator Tereza Cristina, who argued that reducing expenditure growth limits without specific cuts does not constitute true fiscal adjustment. Meanwhile, studies highlight that Brazil spent R$ 1.16 trillion on public debt interest over the last 12 months, prompting calls for more sustainable fiscal rules.