😨 Weakened cuts, rising concerns

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Good morning! This is the last Brazil Daily newsletter of the year. We will dial down our daily politics coverage for the next two weeks — but you will keep receiving our theme-based newsletters (Brazil Agro, LatAm Report, Brazil Business, Brazil Climate, Brazil Sports and Brazil Society. You can choose which ones you want to receive in your preferences).

Small cuts are better than no cuts

Congress significantly weakened Finance Minister Fernando Haddad's fiscal package by altering almost two dozen provisions across three key proposals meant to sustain the country’s fiscal framework. The changes dilute cost-cutting measures that many economists had already deemed insufficient to tame the public debt.

👉 Why it matters. The adjustments reduce expected savings and complicate efforts to re-establish fiscal discipline. More than that, the whole process is a worrisome snapshot of the government’s inability to get legislation passed on its own terms. 

• That may fuel investors’ worries about Brazil, which should continue reflecting on the country’s weakened currency, already down by almost 30% this year. We will see today how the markets will react to what was passed.

By the numbers. With their eyes already on the 2026 general elections, lawmakers were wary about cutting some programs. In other cases, they succumbed to well-oiled lobbies from civil servant groups seeking to preserve their privileges. Here are some key changes in the spending cut program:

☕ Wake up smarter