Dividends and concessions are excluded from the revenue calculation – 04/18/2023 – Market

The government hit the hammer on how the revenue that will determine the growth of expenses in the coming years will be calculated. The text being sent to Congress this week will leave four items out of account, according to what was reported to the Sheet.

The government will take all revenue from concessions and permits, dividends and participations paid by state-owned companies, and gains from the exploitation of natural resources (which mainly comprises oil royalties) – in addition to the account with constitutional transfers made to states and municipalities.

The final format was awaited by analysts as it directly affects the scenarios for the primary result and public debt in the coming years.

That’s because the collection will dictate how much spending will grow in real terms, in the government’s proposal. If revenue grows less, spending also grows less.

Spending will increase in real terms, corresponding to 50% or 70% of the real evolution of revenues verified in the previous year (and always having as a final result for them a final real growth of 0.6% to 2.5%).

In the government’s view, the withdrawal of these revenues is necessary so that a permanent growth in expenses is not generated over the years based on non-recurring revenues (that is, that are not repeated in other years).

Withdrawal, however, may lead to further limitation of expenses. Until February, for example, the total net revenue accumulated in 12 months had a real increase of 4.2% against a year before. The one that discounts concessions, dividends and royalties, of 0.2%.

Felipe Salto, chief economist at Warren Rena brokerage and former executive director of IFI (Institução Fiscal Independente, Senate body that monitors public accounts), calculates that there will be a real drop in revenues of 0.7% by the middle of the year already considering the items excluded by the government.

As shown to Sheetthe rules may leave the expansion of spending more restricted than imagined by the government – ​​which even signaled a real increase of 2.5% in expenses in 2024.

However, given the restriction on revenues, analysts have been calculating that the expansion will only be the equivalent of the baseline – 0.6%.

In the government, the information is repeated that the expansion of revenues for next year will not remain as small as possible and that it will try to raise this percentage – although it is not yet detailed how.

Primary revenues that support the expansion of expenditure will discount:

1. Primary income from concessions and permits
2. Primary income from dividends and equity
3. Primary income from the exploitation of natural resources
4. Legal and constitutional transfers to states and municipalities