Haddad says that part of the R$230 billion loss was inherited from Bolsonaro

Minister Fernando Haddad, of Finance, said on Monday night (29) that the federal government’s deficit of R$230 billion in 2023 is, in part, the result of expenses not paid by the Bolsonaro government in 2022, including court orders and compensation to states and municipalities for reducing ICMS.

The government ended 2023 with a primary deficit of R$230 billion, of which R$92.4 billion was allocated to the payment of court orders not paid in previous years. Disregarding this expense, the result was negative at R$138.1 billion (-1.3% of GDP).

“Haddad called the postponed values ​​a ‘default’. ‘Of the R$ 230 billion [de déficit]practically half is payment of debt from the previous government that could be extended to 2027 and we thought it was not fair whoever was the president”, highlighted the minister.

Haddad highlighted that around half of this amount corresponds to late payments that were made by decision of his department, seeking to remove this liability from the statistics.

The minister emphasized that, despite the negative number, the financial market understood the nature of the worsening of the result, due to the payment of delayed expenses.

“The real deficit (discounting late payments) was very close to the number I had announced on January 12, 2023, which was a deficit of 1% of GDP. It was worth making the effort and taking these decisions, which were subsequent to the January 12th announcement, but which are supported by good practices from both an economic and constitutional point of view”, stated Haddad.

Court orders represent expenses resulting from court decisions that the government can no longer appeal. A constitutional amendment in 2021 limited the payment of these expenses, but the government of President Luiz Inácio Lula da Silva (PT) chose to pay off this stock, with the approval of the Federal Supreme Court (STF).

In addition, R$14.8 billion was disbursed to states and municipalities as compensation for the reduction in ICMS. In 2025, the government will still have to pay another R$4.5 billion, totaling R$27 billion.

Haddad states that the federal government’s decision taken in 2022 harmed governors with a tax exemption not approved in their ICMS assemblies, resulting in an estimated loss of R$80 billion in revenue. “We made an agreement worth R$27 billion to, at least, alleviate the governors’ drama”, concluded the minister.