Federal revenue falls for the third month in a row – 09/21/2023 – Market

Federal government revenue had a real drop of 4.14% in August compared to the same month of the previous year, to R$ 172.785 billion, marking the third consecutive month of decline on an annual basis, the Federal Revenue reported this Thursday (21 ).

The drop, which followed a reduction of 4.20% in July and 3.37% in June, comes at a time of concern in the financial market about the capacity of the government’s economic team to increase revenue to a level sufficient to allow compliance with targets set out in the fiscal framework in 2024.

From January to August this year, total revenue fell by 0.83% adjusted for inflation compared to the same period in 2022, to R$1.518 trillion.

The collection administered by the Revenue, which includes the collection of taxes under the jurisdiction of the Union, had a real decrease of 3.33% in August compared to the same month in 2022, to R$167.036 billion. In the accumulated period from January to August 2023, however, there was an increase adjusted by the IPCA of 0.69%, informed the agency.

Revenues administered by other bodies, with a large weight from royalties on oil exploration, had yet another sharp real drop last month, of 22.92%, to R$ 5.749 billion, accumulating in the first eight months of the year a low of 23.22%.

According to the Revenue, the August collection result was once again influenced by changes in tax legislation and atypical payments, especially IRPJ (Corporate Income Tax) and CSLL (Social Contribution on Net Profit), both in 2022 and in 2023. These same reasons were also cited as responsible for the negative result in July.

Last month, IRPJ and CSLL totaled R$28.505 billion, a real decrease of 23.30% compared to the previous year. “It is worth noting that in the month of August 2022 there were atypical payments of R$5 billion,” explained the IRS in a note.

The government sent next year’s Budget project to Congress, predicting a small primary surplus, a result that includes revenues of R$ 168.5 billion from new fundraising actions, including measures not yet approved by Congress, which raised questions from experts .

In a statement on the decision to cut interest rates on Wednesday (20), the Central Bank once again addressed the fiscal issue, reinforcing the importance of “firm pursuit” of targets for anchoring inflation expectations and for conducting policy monetary.

Despite the skepticism of a large part of the markets, the Secretary of Economic Policy of the Ministry of Finance, Guilherme Mello, said this week that the government observes an improvement in the scenario for revenue in 2024, arguing that this factor could facilitate the achievement of the target of zero deficit next year.