If ‘bold’ fiscal targets are met, government delivers ‘resolved situation’ in 2026, says Treasury Secretary

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Rogério Ceron says that the proposed new fiscal rule guarantees a sustainable trajectory for the economy, and targets set the pace – that is, whether the debt will take more or less time to stabilize. The Secretary of the National Treasury, Rogério Ceron, said this Wednesday (19) that the fiscal targets of the new framework for public accounts are “daring” – and admitted that there is a risk that they will not be met. Ceron said, however, that even if the government does not reach the expected primary result indexes (difference between revenue and expenditure, excluding interest on the debt), there will be a stabilization of the debt. What changes, in this case, is the deadline for the result. “We are looking for a more intense path to pursue this [ao definir metas ousadas]. If it is possible to fulfill this primary path, we will arrive in 2026 with the situation resolved. If it doesn’t happen in its entirety, the adjustment takes longer, but it happens”, he declared, in an interview with the GloboNews Connection. With the fulfillment of the fiscal targets, the economic area says that the public debt will stop growing in 2026. says Rogério Ceron, from the National Treasury, stabilization would come later, until 2029. In 2022, the indicator was at 73.5% of GDP. According to the National Treasury, debt could exceed 80% of GDP at the end of the government Lula, but it will not exceed the 82% mark The fiscal targets were set based on a tolerance interval. The government’s objective is to return to a positive result in its accounts as early as next year. See the graph below, which shows the result as a percentage of GDP: Proposed primary surplus targets (fiscal framework) Presentation – Ministry of Finance Targets and triggers According to the proposed fiscal framework, if fiscal targets are not met, a “trigger” would be set in motion, limiting growth expenditure to 50% of the increase in revenue (against the normal rule of a higher increase of 70%). In order to meet the fiscal targets, the Minister of Finance, Fernando Haddad, informed that the government is seeking an increase in revenue of up to R$ 150 billion. Several measures have already been announced, and others are under discussion, such as updating the value of properties in the IR, repatriation and regularization of funds. A survey carried out by economists at Warren Rena brokerage indicates the need for at least R$ 254 billion in revenue increase, by 2026, to reach the baseline of the primary result targets of the fiscal framework presented by the economic team. “If they can’t recover the flight plan revenues, it’s going to take a little longer [para estabilizar a dívida]. But what is relevant is the uncertainty that there would be a lack of control of expenses and an explosive trajectory of the debt, left out of the discussion. Spending limits exist and the debt trajectory will stabilize at some point”, declared Ceron, from the National Treasury.

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