Bradesco, XP and IFI predict a hole in government accounts in 2024

The goal of the fiscal framework proposed by the government of Luiz Inácio Lula da Silva (PT) – already approved by the Chamber and now being discussed in the Senate – is to close the public accounts for next year with a neutral primary result. That is, with income and expenses equal or within a tolerance band (up or down) equivalent to 0.25% of the Gross Domestic Product (GDP).

Market analysts, however, view this objective with skepticism. The median of projections collected by the Central Bank points to a primary deficit (expenses greater than revenues) equivalent to 0.7% of GDP in 2024. But institutions such as Bradesco, XP Investimentos and the Independent Fiscal Institution (IFI), linked to the Senate, predict an even bigger gap of 1% of GDP.

“To close the account and reach a neutral primary result in 2024, in line with the target defined in the LDO, the government needs an additional BRL 110 billion to BRL 150 billion in net transfer revenues. The measures announced by the government so far are insufficient to reach such a figure”, comments the XP team.

There are also doubts for the following years. While the government promises a primary surplus of 0.5% of GDP in 2025 and 1% in 2026, the midpoint of economists’ expectations point to 0.34% and 0.2% of GDP, respectively. If the projections are confirmed, this means accounts in the red throughout the Lula administration.