Debt in public accounts will exceed R$100 billion in 2023

The central government recorded a primary deficit of R$26.4 billion in August, a result worse than expected by the market. The median projection was a negative balance of R$25.1 billion.

As a result, the year-to-date deficit exceeded the R$100 billion mark, according to a report published this Thursday (28) by the National Treasury. The numbers refer to primary results – that is, they do not include expenses with the payment of public debt – in the sum of Treasury, Central Bank and Social Security.

In isolation, the August number was better than that recorded in the same month last year, when there was a deficit of R$50.4 billion. However, there is a lot of “calendar effect” in this apparent improvement.

The month of August 2022 concentrated payment of court orders (which in 2023 were paid in April and May) and electoral financing, and also a meeting of accounts relating to Campo de Marte airport (SP). These are expenses that were not repeated in August this year.

In the sum of the results from January to August, however, the situation of public accounts worsened. In 2023, the government will accumulate a deficit of R$104.6 billion, compared to a surplus of R$22.9 billion in the same period last year.

Comparing the two periods, net revenue (which excludes transfers to states and municipalities) fell by R$71.9 billion, or 5.5%. Meanwhile, expenditure increased by R$58 billion, or 4.5%.

The drop in revenues is related to lower revenue from so-called unmanaged revenues, such as concessions and permissions, dividends and participations and exploration of natural resources. But administered revenues (mainly taxes) also decreased.

On the other hand, there were significant increases in expenses with Bolsa Família, health and social security benefits. Spending on the INSS was affected by the growth in the number of beneficiaries and also by the real increase in the minimum wage, which is the minimum wage for retirement and pensions.

Judging by the government’s own forecasts, the gap will increase in the coming months. In the most recent revenue and expenditure report, published last week, the Ministry of Planning reported that the projection for the full year is a primary deficit of R$ 141.4 billion, equivalent to 1.3% of the Gross Domestic Product (GDP ).

For 2024, the target defined by the fiscal framework is zero deficit. However, experts in public accounts consider it unlikely that the government will be able to achieve this result amid the increase in spending and the strong dependence on increased revenue.

The Minister of Finance, Fernando Haddad, is looking for at least R$168 billion in revenue to cover the gap. Most of them, however, depend on the approval of taxes and other revenue measures by Congress.