State accounts on the water line. “What the minister said about me was offensive”

The Public Finance Council is more pessimistic about the growth of the Brazilian economy this year.

The Public Finance Council (CFP) estimates a surplus of 0,1% of Gross Domestic Product (GDP) in 2026, which contrast with the projection of a deficit of 0,6% in the September report.

This upward revision, to the same amount anticipated by the government in the State Budget for 2026, “mainly results from the ‘carry-over’ [transferência] positive result of 2025, which improves the balance by 0.7 pp of GDP”, explains the CFP, in the economic forecasts released this Wednesday.

According to the body, this effect is partially offset by spending measures associated with storms and war, but whose impact is “more than offset by the upward revision of tax revenue (+0.5 pp), in particular VAT and IRS (+0.4 pp)”.

In the document released this Wednesday, the CFP highlights that the budget surplus reached 0.7% of GDP in 2025, “higher than expected by the Government and official national and international forecasters”.

Surplus

The CFP is more pessimistic about the growth and economy Portuguese: will be 1,6% em 2026.

The institution review em low the forecast by 0.2 percentage points compared to the September scenario, when it projected growth of 1,8%, a record “even higher than the latest projections available for the euro area”, reads the report.

This review takes place after storms felt between January and February, particularly in the Central region, with the recovery facing some challenges, in addition to the “possible unfeasibility of investment projects given the risk of repetition of similar phenomena”.

Furthermore, the conflict in middle East it also affects economic activity, and for Portugal, which is a net importer of oil and natural gas, there is a direct effect on consumer prices but also indirect effects on production costs, as well as impacts on confidence, supply chains and the activity of main trading partners.

Inflation

A inflation will accelerate to 2,9% in 2026, particularly due to the increase in energy prices, according to the same forecasts.

According to the CFP, the worsening of inflation is “mainly motivated by its component energy — via fuels, electricity and gas –, although second-order effects are anticipated in other components of the consumption basket, notably transport, food and industrial goods”.

This increase in food prices will have a regressive distributional impact, notes the agency, due to the greater weight on the budget of lower-income families.

Didn’t like the statements

Two weeks ago, the Minister of Finance, Joaquim Miranda Sarmento, highlighted the differences between the institutions’ forecasts for the 2025 budget balance and the final result, reiterating that “political criticism and especially criticism of the increase in net primary expenditure happened from the moment the AD went to the Government”.

Regarding the CFP, the minister highlighted that the September 2025 review, which maintained the zero balance forecast, was “carried out on the eve of the release of the INE national accounts, which carried out a review of nominal GDP”.

“These statements with regard to the CFP They were not fair, correct statements and with regard to the president, they were statements that were even a little offensive towards me.“, reacted Nazaré da Costa Cabral.

The president of the CFP highlighted that the institution is “always careful to say that these are projections in invariant policies” and accepted the divergence, which was essentially related to the behavior of tax revenue, especially VAT.

The official also highlighted that the Minister of Finance himself presented an estimate of a surplus of 0.3% in October, after the INE review, “with much finer knowledge including access to microdata on the behavior of tax revenue, much finer information on the behavior of tax revenue and expenditure”.

“I have always believed that the Minister of Finance respects the independence of the CFP and I want to continue believing“, he said, adding that this is a sensitive phase for the institution, because it will change leadership, with its mandate coming to an end.