The financial market has made mistakes in its projections and needs to do a “re-reading”, said this Thursday (28) the Minister of Finance, Fernando Haddad. He commented on the drop in the stock market and the rise in the dollar, which reached R$6 at the opening of negotiations, during a press interview to detail the spending cut package and the Income Tax reform.
“It’s not that he made a few mistakes. The market posted 1.5% growth [do Produto Interno Bruto, PIB]and we have almost 3.5% growth”, highlighted the minister, citing projections from the beginning of the year. Haddad also said that the market estimated a deficit in public accounts of 0.8% of GDP, while the government expects to record a deficit of 0.25% of GDP for the year.
“The market also has to reinterpret what the government is doing. Neither in growth nor in deficit did the market get it right”, he added.
Released by the government last Friday (22), the primary deficit projection – a negative result of government accounts without interest on public debt – of 0.25% of GDP disregards expenditure outside the fiscal framework, such as credits extraordinary funds for the reconstruction of Rio Grande do Sul, for fighting forest fires and paying court orders. Considering these expenses, the primary deficit estimate for this year rises to R$65.3 billion (0.57% of GDP).
The effective primary deficit, which considers spending outside the fiscal framework, is what counts for government debt. General government gross public debt is the main indicator used in international comparisons to assess a country’s solvency.
Compensations
Due to a meeting with the president of the Senate, Rodrigo Pacheco, and the leaders of the parties in the House, Haddad left the interview at around 9:40 am. The executive secretary of the Ministry of Finance, Dario Durigan, who replaced Haddad, tried to reassure the financial market and reiterated that the proposed exemption from Income Tax for those who earn up to R$5,000 per month will be fully offset by the increase in taxes for those who receive more than R$50 thousand per month.
Executive Secretary of the Ministry of Finance, Dario Durigan. Photo: Fabio Rodrigues-Pozzebom/ Agência Brasil – Fabio Rodrigues-Pozzebom/ Agência Brasil
“The government would not be presenting the measure if it did not stand up from the point of view of tax compensation. We do not give up on an approved measure that is not compensated”, declared Durigan. Earlier, Minister Haddad said that the Income Tax reform is the result of calculations prepared by the Federal Revenue Service over the years.
To reduce tensions with the market, highlighted the executive secretary, the government is including the new Vale Gás and the Pé-de-Meia program in the fiscal framework. The two programs are criticized for operating subsidies outside the Federal Budget and the spending limit imposed by the new fiscal framework, which leaves room for questions from the Federal Audit Court (TCU).
