Compare the fiscal target discussed for 2024 with the results of recent years – 11/02/2023 – Market

The change in the 2024 fiscal target from zero to a deficit, a measure currently being studied by the government, will make Brazil extend the negative series that began ten years earlier — and which only had the 2022 result as an exception.

The deficits in primary results (revenues minus expenses, disregarding the interest account) began during the Dilma Rousseff (PT) government in 2014, amidst a continuous worsening of accounts observed since 2012.

The problems deepened until 2016. That year, Dilma was the target of an impeachment process and Michel Temer (MDB) took charge of the country.

With the institution of the spending ceiling — a rule that limited the increase in expenses to inflation —, the accounts entered 2017 on a path of continuous improvement. The process was only interrupted by the pandemic, in 2020.

Despite the evolution in numbers, the accounts remained unbalanced. There was only a positive result — when the government collects more than it spends — in 2022, the last year of the Jair Bolsonaro (PL) administration.

The election of today’s president Luiz Inácio Lula da Silva (PT) and the negotiation with Congress to release expenses in 2023, still at the time of the government transition, ended up reversing the scenario and causing the accounts to go into the red again.

Despite representing a worsening in relation to what was originally proposed and a frustration of expectations generated, the deficit corresponding to 0.5% of GDP (Gross Domestic Product) in 2024 —a number being assessed by the government— would still represent an improvement compared to the previous year. . This is because the result projected by the Ministry of Finance for 2023 is a deficit of 1.1%.

Furthermore, the 0.5% deficit in the next calendar would be a better performance than that observed in seven years of all with results in the red. It would only be behind 2014 itself, in addition to 2021 (in both, there was a 0.4% loss) and 2022 (when the result was positive by 0.5%).

The 2024 result may vary, however, as the fiscal framework assumes a range of 0.25 percentage points up or down.

According to the rule in force from next year, if the central target for the deficit is changed to 0.5%, the final deficit could vary from 0.25% to 0.75% of GDP. There is a margin of tolerance.

The government’s negative result means that revenues do not cover expenses. As a result, all accounts in the red are paid with debt — in turn, paid for by the entire society through, mainly, taxes.