💰 Budget skulduggery

Good morning! The Central Bank’s economic activity index flagged 0.9% growth in January — obliterating market expectations, which stood at 0.22%. Considered a bellwether of the official GDP figures, the index suggests that the economy may continue to overheat despite a drop in household consumption in Q4 2024.

Congress defiantly resurrects secretive budget scheme

At lightning speed and with near-unanimous support from members in both the House (361-33) and Senate (64-3), Brazil’s Congress voted to preserve their ability to allocate federal funds by way of massive budgetary grants without full transparency and accountability — and lawmakers had the tacit approval of the Luiz Inácio Lula da Silva administration in doing so.

• The only opposition came from parties representing extremes of the political spectrum:  the left-wing Socialism and Freedom Party, and the ultra-libertarian Novo party.

👉 Why it matters. The new resolution passed on Thursday allows lawmakers to allocate budgetary grants (which eat up one-quarter of federal discretionary spending) with the signature of their party leader, without the need to identify who requested the money in the first place. This essentially recreates the infamous “secret budget” mechanism that had been a feature of Brazilian lawmaking for the past half-decade or so.

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