Government says it will block R$ 1.5 billion in the budget and expands forecast of deficit

Planning

A decree should be signed in the coming days to confirm the blockade

Brasilia DF) – The federal government pointed out this Friday (21) an additional block of BRL 1.5 billion in the 2023 annual budget and increased the projection of a deficit in public accounts. In May, the government had decided to block BRL 1.7 billion. As a result, the total contingency for the year is R$ 3.2 billion.

A decree should be signed in the coming days to confirm the blockade. The government has not yet announced which ministries will be hit.

Budget locks are made to meet the public spending ceiling. This control rule – which was instituted during the Michel Temer (MDB) administration and remains in effect – prevents the growth of expenses above the inflation of the previous year.

The blocks occur after an increase in the projection of mandatory expenses. As the name implies, this term includes expenditures that the government cannot fail to make, such as, for example, the payment of social security and assistance benefits and the salary of civil servants.

In the first half, the Chamber and the Senate voted on the new fiscal framework, a proposal by the Lula government to replace the spending ceiling. As senators made changes to the text, deputies will analyze the changes in a new round of voting, which should take place in August, after the legislative recess.

Deficit

The estimate of the primary deficit (the hole in the public accounts) this year rose from R$136.2 billion to R$145.5 billion, which is equivalent to 1.4% of the Gross Domestic Product (GDP).

A deficit occurs when expenditure exceeds revenue. Expenses with the payment of interest on the public debt are deducted from the calculation.

Despite the increase, this value is still below the fiscal target for 2023, which indicates a primary deficit of R$ 238 billion (2.2% of GDP).

The numbers appear in the Evaluation Report of Primary Revenues and Expenditures for the 3rd bimester, released this Friday by the Ministries of Planning and Budget and Finance.

According to the assistant secretary of the National Treasury, Viviane Varga, the government maintains the perspective of a primary deficit of 1% of GDP in 2023.

She explained that the “slight increase” in the deficit from the 2nd to the 3rd^O This two-month period was due, to a large extent, to the payment of the compensation agreement to states and municipalities for the loss of collection of the Tax on Circulation of Goods and Services (ICMS) caused by the exemption of fuels in the Jair Bolsonaro government.

*With information from Metrópoles

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