The federal government announced on Thursday (16) that it has ruled out the possibility of changing, at this time, the “zero deficit” fiscal target for 2024. This fiscal target foresees that, next year, the government will spend only what it collects and whatever you have in cash – that is, without increasing public debt to meet expenses and investments.
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Meeting with Economic Team
Danilo Forte and Padilha met on Thursday (16/11), at Palácio do Planalto, with ministers Esther Dweck (Management and Innovation), Fernando Haddad (Finance), and Simone Tebet (Planning and Budget), and the government leader in Congress, senator Randolfe Rodrigues (Rede-AP), to address the topic.
Deputy Danilo Forte’s preliminary report was approved by the Mixed Budget Committee (CMO) on 7 November. The text is a simplified summary of the main opinion and does not include some controversial topics, such as the electoral fund.
Goal Maintained for Now
The government does not want to create a problem for the Minister of Finance, Fernando Haddad, who defends the goal of zero deficit.
However, internally, Lula had already warned that there would be no investment contingency for the year 2024. This was the condition, including, for the president to accept the argument of the Minister of Finance, Fernando Haddad, that there should be no change in the target.
In this scenario, the economic team is trying to gain time to approve measures in the National Congress that could increase revenue and thus try to insist on maintaining a zero deficit.
Understanding of the Ministry of Finance
The understanding of technicians from the Ministry of Finance is that the maximum contingency allowed for the year 2024 will be around R$ 25 billion, contrary to the R$ 53 billion pointed out by economists and the Budget rapporteur himself, deputy Danilo Forte (Union-EC).The vision is that the new fiscal framework guarantees a minimum growth in expenses of 0.6%, in real terms, compared to the previous year, and this rule must also be respected when blocking expenses. In other words, the contingency volume cannot place the expected expenditure below this floor.
Analysis:
The crisis that Minister Fernando Haddad experienced a few weeks ago, when President Lula spoke of the government’s difficulty in achieving zero deficit in 2024, was overcome by maintaining the fiscal target. Even though the market predicts that there will be a deficit, Haddad argued that maintaining the target helps with the progress in Congress of measures that move towards tax justice. In other words, to ensure that those who do not pay tax start paying or those who earn a lot and pay little start paying more. The measures seek to close the revenue gaps. Maintaining this ambitious target not only helps confirm the path the government has chosen for Brazil, but also increases the chances of approval in Congress of economic agendas aimed at increasing revenue.
