Haddad Announces R$31 Billion Budget Cut, IOF Increase Reversal

Brazil's Finance Minister Fernando Haddad announced a R$31 billion budget cut on May 23rd, 2025, during a press conference in São Paulo. This drastic measure is part of a broader strategy to control public spending and reinforce the country's fiscal framework. Haddad explained the government's decision, stating, "We have no problem in correcting the route as long as the direction set by the government is maintained, of reinforcing the fiscal framework." The announcement follows concerns raised by market operators regarding recent IOF (Imposto sobre Operações Financeiras) increases. The government responded by partially revoking these increases. Haddad clarified the government's position, saying, “We understand that the revision was fair." The overall aim is to achieve R$50 billion in savings to ensure fiscal stability by year's end. The decree detailing these measures has been officially published. This decisive action demonstrates the government's commitment to fiscal responsibility and its willingness to adapt to market feedback.