Brazil: greater fiscal clarity, more uncertain future

• The government announced the country’s new fiscal framework that proposes an increase in fiscal spending that is conditional to rises in revenues and targeted surpluses from 2025 onwards.
• Brazilian asset prices initially reacted upwards; consensus was pessimistic given recent signals from economic authorities.
• Further analysis suggests inconsistencies and stresses how the proposal does not tackle the economy’s structural issues.
• We maintain a defensive stance towards Brazilian equities and bonds.