Government will have to prove that the Budget report is not a piece of fiction – 03/22/2024 – Adriana Fernandes

The government gained immediate relief with the blocking of just R$2.9 billion in Budget expenses, the amount anticipated by Folha.

Senators and deputies must also be quite relieved because parliamentary amendments will be shielded from blocking at the beginning of the municipal election year, when there is pressure on the government to release them as soon as possible.

The INSS benefits review program guaranteed savings in Budget spending and showed the increasing importance of this type of work for the government from now on.

The President of the Republic fails to understand this and start demanding a review of expenses, such as the charges he makes to his assistants.

I wish Lula had said that the government will have to “do much more” to review spending, at the first broad ministerial meeting of the year, which took place on Monday (18).

With his popularity falling, Lula, however, preferred to encourage programs with more spending, with which he hopes to improve his evaluation by the population.

Reviewing expenses to open up fiscal space in the Budget should be priority number one for the president, who has already managed to greatly increase the level of permanent expenses during his third term.

If it weren’t for the review of expenses (a practice despised and even rejected by most Esplanada ministers), the blockade would have been greater, with an impact on everyone. It’s fact.

Chamber technicians even talked about a contingency of R$41 billion.

The expected savings from the Social Security spending review was R$9 billion, but government members estimate that it could reach R$15 billion by the end of the year. To be checked.

Starting other fronts of review becomes urgent and essential for Minister Fernando Haddad (Finance) to hold back the pressure to change the fiscal target.

The government bought time with the first bimonthly Budget report, but not credibility around economic analysts’ revenue and expenditure forecasts.

The government remains to show whether the revenue increase measures will produce the expected results throughout the year. This is central. The change in the way in which closed-end funds for the super-rich are taxed has already had an effect, but there are doubts in the numbers indicated by the government for other measures to increase revenue with Carf and ICMS subsidies.

Uncertainty remains, mainly, about the developments in the negotiations with Congress for three measures: exemption from payroll and municipalities and Perse (program for the events sector). None of this entered the bill as it should have. Neither is the change in the expected increase in Proagro (rural insurance) subsidies, which remain alarming and are a police case.

On the other hand, the government seems to have found an asset to increase revenue with the measure that restricts tax compensation made by companies as a result of court decisions. It predicted R$24 billion more in revenue, which made a difference.

Data obtained by the column shows that this measure (adopted at the beginning of the year through a provisional measure) is having a better effect than expected, with a 43.2% drop in compensation in the first two months. The optimism in the economic team regarding the measure is great.

Despite criticism, the report helped to improve the debate. It reduced revenues that were overestimated and increased expenses that were underestimated.

But none of this will be enough if the government fails to anchor expectations and show that the report is not a piece of fiction. In this sense, the interview given by the Ministries of Finance and Planning to detail the report was a disaster.

Instead of facing the forecasts head on, the team did not detail the numbers and pushed several problems that the government will have to face to convince everyone that the public accounts scenario is in fact more favorable. They owed money.

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