Debt in public accounts could be greater due to spending and bomb agendas

The challenge for the government of Luiz Inácio Lula da Silva (PT) of balancing public accounts in 2024 may be even greater than “just” finding R$168 billion more in revenue. According to analysts, the total expenditure projected in next year’s Annual Budget Bill (PLOA) would be underestimated by more than R$20 billion.

The difference could lead to non-compliance with the target of zeroing the primary deficit even with the increase in revenues targeted by the Minister of Finance, Fernando Haddad. The situation could further worsen if Congress approves a series of measures in progress that foresee a sharp reduction in revenue or an increase in expenses – the so-called “bomb agendas”.

The main underestimation would be in Social Security expenses, projected at R$913.9 billion in the budget presented at the end of August by the government. The Independent Fiscal Institution (IFI), linked to the Senate, calculates that the expenditure, in fact, should be R$932.4 billion, a difference of R$18.5 billion.

For Gabriel Leal de Barros, chief economist at Ryo Asset and specialist in public accounts, the government is forecasting spending around R$14 billion less under this heading. “The difference is mainly due to the zeroing of the INSS queue [Instituto Nacional do Seguro Social] that the government says it will do”, he explains. “Even if the queue doesn’t clear, we see a very strong growth in the number of beneficiaries, so it’s a worrying variable,” he says.

In the economist’s calculations, there would still be an underestimation in payroll expenses, Continuous Payment Benefit (BPC) and Bolsa Família. “Ultimately, there are almost R$20 billion in underestimated expenses, in a context in which revenue is overestimated,” he states.

For Barros, the R$ 168 billion that the government expects to raise in 2024 will hardly be achieved, mainly due to what the Treasury expects to obtain with the resumption of the quality vote in the Administrative Council of Tax Appeals (Carf) – around R$54.7 billion.

“Petrobras is the company that has the most litigation in Carf, but to have this agreement, the directors need to agree to the withdrawal of these disputed actions”, he explains. “But, without legal support, they can be held personally liable, so it is very difficult for them to take that risk,” he says.

The provisional measure (MP) that regulates tax exemption for tax credits arising from subsidies for investments should also be dehydrated in Congress, assesses the economist. The text regulates a decision by the Superior Court of Justice (STJ), according to which tax credits must be included in the IRPJ and CSLL calculation basis.

The Ministry of Finance calculates that the measure would have the potential to generate an additional R$35 billion in revenue next year, but there is resistance among parliamentarians who consider the change to be harmful mainly for companies in the Northeast and criticize the fact that there is no deadline for transition. .

Economist Tiago Sbardelotto, from XP Investimentos, estimates that Social Security expenses should be close to R$937 billion in 2024, R$23.1 billion above that calculated by the government. “The forecast in the Budget is even below growth with the increase in the minimum wage”, he says.

According to him, spending on Bolsa Família would also be underestimated, at around R$10.5 billion. “The budget piece brings R$169.5 billion, but the annualized benefit would be closer to R$180 billion,” he states. “But in this case it is less worrying, because the government can have some control over this expense to the extent that it can remove families from the list of beneficiaries”, he highlights.

“This year we saw the government review the registries, check for fraud and exclude families, so that today there is a smaller pool of beneficiaries than there was at the beginning of the year. It is possible to make this adjustment, so there is less concern. In the case of Social Security, there is no way”, points out Sbardelotto.

Government wants to cut R$12.5 billion in Social Security spending

The government calculated social security expenses for 2024 taking into account a reduction of R$12.5 billion with spending cuts, according to internal technical notes obtained by the newspaper “Valor Econômico” through the Access to Information Law (LAI).

According to the publication, the savings would come mainly from three actions. The first would be the automation of recovery processes for amounts deposited after the death of the insured.

The second, the optimization of the process of refunding amounts not received by beneficiaries and which are returned by paying agents.

The third and main measure would be to strengthen actions to prevent irregularities.

“I think it is an uncertain number to make up the budget piece. It could be done like this year’s Bolsa Família, in which the initial allocation of the LOA [Lei Orçamentária Anual] the effects of the cadastral review were not included,” economist Vilma Pinto, director of IFI, told the newspaper.

Bomb tariffs could make achieving the fiscal target even further away

If the underestimated expenses were not enough, the chances of meeting the objective established in the new fiscal framework could become even more distant if Congress approves one or more bomb agendas already in progress.

One of them is the proposed amendment to the Constitution (PEC) approved in the Senate which, if it also passes in the Chamber, could incorporate up to 50 thousand public servants who were hired from the former federal territories of Rondônia, Amapá and Roraima into the federal government’s payroll. , transformed into states in the 1980s. The additional cost, in this case, would reach R$6.3 billion for the Union.

Bill (PL) 334/2023, which extends the payroll tax exemption to 17 sectors and also extends the benefit to city halls, would negatively impact the federal government’s accounts by approximately R$19.5 billion, according to calculations by Gabriel Leal de Barros, from Ryo Asset.

There is also a complementary bill (PLP 136/2023), which provides for the recomposition of losses of state governments and city halls due to the cut in ICMS on fuels made in 2022 by former president Jair Bolsonaro (PL), in addition to additional transfers to state (FPE) and municipal (FPM) participation funds to compensate losses from 2023 in relation to 2022.

The PLP was sent by the Executive itself following an agreement between the Ministry of Finance and the state governments, approved in June by the Federal Supreme Court (STF).

For now, a transfer of R$2.3 billion to municipalities and R$1.6 billion to states is expected due to the drop in the third quarter of this year in relation to the amount recorded last year. There may be new transfers, however, if there are losses also in the fourth quarter.

Another bombshell is PEC 15/2021, which creates a type of Refis for municipal pension debts, with a discount of 60% on fines, 80% on interest and 50% on fees, in addition to allowing payment in installments over 20 years.

Barros calculates that if a third of the stock of municipal debts, estimated at R$200 billion by the National Confederation of Municipalities (CNM), is effectively paid, as there are chances of full forgiveness of interest, fines and late payments, the fiscal loss for the Union will be worth R$133 billion in two decades, or R$6.7 billion per year.