Government discusses deficit target of 0.5% in 2024 – 10/31/2023 – Market

Government members began to discuss sending a message to the National Congress reviewing the target of zero deficit in public accounts, after President Lula (PT) himself declared that the country will “hardly” achieve this promise next year.

Defender of maintaining the zero deficit target, Minister Fernando Haddad (Finance) has already admitted the risk of defeat in the struggle within the government, according to palace sources.

The president’s allies propose that the message be sent to Congress before voting on the preliminary report of the 2024 Budget, in time for the increase in the target to be incorporated into the text of the LDO (Budget Guidelines Law).

Another strategy being analyzed is reaching an agreement in Congress. Lula invited leaders of allied parties to a meeting this Tuesday (31) at Palácio do Planalto.

Still according to members of the Palace, the target under debate would be 0.5% for 2024. But it can be reevaluated.

On the morning of this Monday (30), members of the government even studied sending the message immediately, as there was an expectation of voting on the report on Tuesday (31).

The idea was postponed after it was discovered that the Joint Budget Committee had not been formally convened to vote on the preliminary report, authored by deputy Danilo Forte (CE). As a result, the government will have until next week to assess the best time to send it.

According to a member of the Executive, sending the message is the only instrument, initiated by the government, to change the target. Another alternative would be construction in conjunction with the National Congress. But the rapporteur himself has already warned the government that he will not take on the task alone.

The president’s allies have defended that he does not give up the prerogative of defining the economic policy model for the country. According to members of the government, this would be the opinion of the Minister of the Civil House, Rui Costa, for example.

In the opinion of the head of the Civil House, it would not be up to Congress or the market to set this target — even according to reports from government members.

In addition to Costa, the Minister of Planning, Simone Tebet (MDB) has already expressed her support for making the target more flexible, in the name of governability. Her opinion would be that the adoption of a more realistic level would not affect the primary surplus commitment at the end of the Lula government.

According to reports, minister Alexandre Padilha (Political Articulation) adopts a more moderate tone in conversations on the topic, in an attempt to make Lula’s guidance viable. His attitude was interpreted as support for flexibility. But the minister has already publicly come out in defense of the head of Finance.

Haddad’s isolation in the dispute has weakened the minister, whose economic policy has received repeated criticism from the PT. On Friday (27), Gleisi came to Lula’s defense and said that the market had “an irrational reaction” to the president’s statement about the possibility of the 2024 fiscal target not being zero deficit.

With the postponement of the vote in the joint commission, the government gains time to try to provide some protection to Haddad, weakened after defeats imposed by Costa.

There are, however, those who believe in the remote chance of a reversal of the situation, if Lula is convinced to maintain the zero deficit forecast next year.

Government interlocutors within Congress report a “butt” in Lula’s team amid a dispute between Haddad and Costa. The Minister of Finance, according to what they say, insists on pursuing a zero deficit, while the head of the Civil House preaches a review of the target. In the words of a congressman, the government needs to harmonize.