The effort made by the government in the second half of the year will allow the 2024 fiscal target to be met, Finance Minister Fernando Haddad said on Tuesday (27). Participating via videoconference in an event promoted by Banco Santander, the minister stated that the economic team is managing to overcome the challenges to rebalance public accounts, with the help of the new fiscal framework.
The 2024 Budget Guidelines Law (LDO) establishes a target of zero primary result, with a tolerance margin of 0.25% of the Gross Domestic Product (GDP, sum of wealth produced) for more or less. According to the government’s most recent calculations, this is equivalent to a deficit of up to R$28.8 billion for this year.
At the end of July, the government froze R$15 billion of the Budget to ensure compliance with the lower target limit, with deficit of R$ 28.8 billion. The economic team, however, believes that this goal can be achieved by “pooling” linked (non-transferable) expenses that cannot be executed, such as mandatory amendments.
Challenges
The primary deficit is the negative result of the government’s accounts without interest on the public debt. Although he expressed optimism about meeting the fiscal target in 2024, Haddad cited challenges, such as billion-dollar spending without sources of compensation such as tax increases or cuts in other expenses.
As an example, Haddad cited the new National Fund for the Development of Education (Fundeb), approved in 2020. Formed by contributions from the Union and constitutional transfers to states, municipalities and the Federal District, the new Fundeb established that the Union’s contributions increase gradually until reaching 21% of the fund in 2025 and 23% in 2026.
“The new Fundeb multiplied the Union’s contributions. When the new Fundeb level was approved, no source was approved for this,” declared the minister. “The peak [das contribuições da União] will be reached in 2026, but this is not a simple operation.”
Budget
On Friday (30), the government will send the 2025 Budget bill to Congress. Haddad said that the text brings more security in relation to the previous proposal. This is because the government paid off, in 2024, the payment of overdue court orders and next year’s Budget will not have as many extraordinary revenues, such as the taxation of exclusive funds and offshores (overseas investment companies), which are inflating revenues in 2024.
“The proposal [de 2025] It is more balanced and brings more comfort than the previous year. It all starts with the technical area, there is no way to doctor the numbers. It is very difficult to close a budget, so it will be balanced, but I can tell you with great peace of mind: this budget piece gives me more comfort than last year’s. [Orçamento de 2024, apresentado em 2023]”, declared the minister.
