After a meeting at the Planalto Palace, Finance Minister Fernando Haddad announced this Thursday (18) that the federal government will make a R$15 billion budget cut in the 2024 budget to comply with the rules of the fiscal framework and preserve the zero deficit target for public spending set for the end of the year. Of this total, according to the minister, R$11.2 billion will be blocked and another R$3.8 billion will be contingency. 
“The IRS made a great summary of what happened in these six months [na arrecadação]. The same happened with Planning, with regard to expenses. And we will have to make a containment of R$ 15 billion, to maintain the pace of compliance with the fiscal framework, until the end of the year, consisting of R$ 11.2 billion of blockage, due to the excess of expenditure above 2.5%. [de crescimento acima da inflação] provided for in the fiscal framework. And R$3.8 billion in contingencies, due to the Revenue, particularly due to the fact that the pending problems have not yet been resolved [reoneração da folha de pagamento das empresas] with the Federal Supreme Court, the Federal Senate”, explained the minister, in a statement to the press.
He was accompanied by ministers Simone Tebet (Planning and Budget), Esther Dweck (Management and Innovation in Public Services) and the Chief of Staff, Rui Costa. The decision was made after a meeting with President Luiz Inácio Lula da Silva.
Details of the cuts will be announced in the presentation of the Bimonthly Revenue and Expenditure Report next Monday (22), such as the drop in revenue projections and the increase in expenses. The government must then issue a decree listing the departments affected by the cuts.
Both contingency and freeze represent temporary spending cuts. The new fiscal framework, however, has established different motivations. A freeze occurs when government spending grows more than the limit of 70% of revenue growth above inflation. A contingency occurs when the government has a lack of revenue that jeopardizes compliance with the primary result target (result of government accounts without interest on public debt).
In the case of the R$3.8 billion contingency, according to Haddad, there is a greater possibility that it can be reviewed, if the negotiations with the Senate for the re-taxation of payroll of companies from 17 sectors of the economy move forward, with the approval of the measure by parliamentarians, in agreement with the government.
The fiscal target set for this year, according to the Budget Guidelines Law (LDO), is a zero deficit, with a tolerance band of 0.25% of Gross Domestic Product (GDP). This projection remains in place, the minister assured.
