BRASILIA (Reuters) – Brazil’s government tightened spending controls on Friday evening, freezing spending at 19.3 billion reais ($3.33 billion) to comply with this year’s budget rules.

This figure exceeds the 13.3 billion reais in spending announced in a previous report in September, according to a bimonthly report on revenue and expenditure from the Ministries of Planning and Finance.

The government also revised its primary deficit forecast for 2024 to 28.7 billion reais, a slight increase from the 28.3 billion reais previously projected.

The new forecasts remain within the budget target of a zero deficit for the year, allowing a tolerance margin of 0.25 percentage points of GDP in either direction, allowing for a deficit of up to 28,000. 8 billion reais.

The 6 billion reais increase in the spending freeze comes as the government plans higher mandatory spending for this year, which would have exceeded the legally established spending limit.

The new fiscal framework approved last year by President Luiz Inacio Lula da Silva combines a primary fiscal outcome target with an overall spending cap, limiting spending growth to 2.5% above inflation this year .

In practice, this means that when mandatory spending projections increase, the government must freeze other spending to stay within the cap.

The increase in spending projections is mainly due to increased Social Security benefits, according to the latest report.

Rapid growth in mandatory spending has fueled market concerns about the sustainability of Brazil’s fiscal framework, affecting long-term interest rates and the Brazilian real, which has weakened by more than 16% against the dollar since the start of the year.

Finance Minister Fernando Haddad said a long-awaited plan to cut mandatory spending is expected to be announced next week. The government had indicated that the measures would be unveiled after municipal elections at the end of October, but the delay in presenting the package dampened market confidence.

($1 = 5.8010 reais)

(Reporting by Marcela Ayres; editing by Bernadette Baum)