Senate exempts R$5bn annual defense spending from fiscal target | Politics
The Senate approved on Wednesday (22) a supplementary bill that authorizes the federal government to remove up to R$5 billion per year from the fiscal target and spending cap for six years for strategic defense projects, totaling R$30 billion over the period. For 2025, the text makes an exception and allows up to 60% of that amount to be excluded from fiscal rules, equivalent to R$3 billion.
The vote took place after approval from President Lula and a request from Defense Minister José Múcio, who advocates for expanding resources for his area.
The text approved by senators also determines that at least 40% of Defense spending must be used for investments. The bill also prohibits spending on “strategic projects” in the area from being earmarked or blocked by the Executive branch and removes the sector’s unpaid obligations from the primary result target, regardless of the fiscal year of their execution.
Authored by Senator Carlos Portinho (Liberal Party, PL, of Rio de Janeiro) and reported by government leader in Congress, Senator Randolfe Rodrigues (Workers’ Party, PT, of Amapá), the initiative arose at the request of the defense minister. It is a more immediate alternative to the proposed constitutional amendment (PEC) that would have reserved 2% of the federal budget for the sector. The Executive branch’s assessment of that PEC was that it would excessively “restrict” the budget.
After an agreement between Senate President Davi Alcolumbre (Brazil Union of Amapá) and the Planalto Palace, the bill was included on the agenda without going through the Upper House’s thematic committees, the normal procedure for this type of proposal. It was approved by the plenary with 57 votes in favor and only 4 against.
“We have the potential to double the volume of resources for this purpose, with capacity to stimulate the strengthening of the Defense Industrial Base, with significant multiplier effects and densification of the productive fabric, resulting in job and income generation, in addition to ensuring the much-desired continuity and predictability so that projects are completed and expand our defense capacity,” Mr. Rodrigues argued in his opinion.
Senator Hamilton Mourão (Republicans of Rio Grande do Sul), former vice president under the Jair Bolsonaro administration and a former general who advocates for more resources for the Armed Forces, joked about the government’s initiative. “Senator Randolfe is the new patron of the Armed Forces,” Mr. Mourão said on the floor, agreeing with the text’s vote.
Despite the bill’s approval, Mr. Múcio said the text is a temporary solution and that the ministry will not give up on approving the PEC that guarantees budgetary predictability for the Armed Forces. “That predictability PEC had many pros and cons, so we are entering with this stopgap to later return to it,” he told Valor.
Opposing the proposal, Senate opposition leader Rogério Marinho (PL of Rio Grande do Norte) expressed concern about another removal of resources from the primary result fiscal target and called the proposal “electioneering.” The government has already approved in the Upper House the base text of a bill that excludes the R$9.5 billion in spending to mitigate U.S. tariffs from the fiscal targets for 2025 and 2026.
Approved by senators, the proposal now goes to the Chamber of Deputies for review. In the lower house, the Defense Minister expects the same swift approval that the text received in the Senate.
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