Lula blames “greedy market” for demanding fiscal targets from the government itself

Although President Luiz Inácio Lula da Silva (PT) attributed the demand for a target “that they know will not be met” to market greed, the objective of zeroing the primary deficit in 2024 was established by his own economic team. . The head of the Executive, in fact, sanctioned the law that creates the new fiscal framework – and the target to be pursued in the next fiscal year – just two months ago, after much negotiation for its approval in Congress.

Since proposing to balance the primary result starting next year, Finance Minister Fernando Haddad has been discredited by most economic analysts, who consider the goal unfeasible. He argues that he will achieve the result through a series of measures that aim to increase revenue.

Last Friday (27), however, it was Lula himself who said that the zero primary result will “hardly” be achieved in 2024. “Especially because I don’t want to make cuts in investments”, explained the president. “I’m not going to set a fiscal target that forces me to start the year by cutting billions in construction.”

It was not the first time that Haddad was the target of “friendly fire” within the government or the party itself. This Monday (30), he was asked about Lula’s statements, but did not discuss the possibility of reviewing the fiscal target. “My goal is set,” he said. “I will seek fiscal balance in all fair and necessary ways so that we have a better country.”

The minister also stated that some revenue increase measures that were planned for next year “may have to be brought forward” for the current year. “I will announce the measures when they are validated by the President of the Republic,” he said.

One of the main criticisms from economists regarding the Lula government’s fiscal policy is the lack of actions to reduce public expenditure. In place of the spending ceiling, the economic team presented a rule that establishes a kind of “spending floor”, since it foresees an annual growth, above inflation, of at least 0.6% in expenses, even though revenues fall.

“The brake is also an accelerator”, compared Rodrigo Leite, professor of Finance and Management Control at the Institute of Postgraduate Studies and Research in Administration (Coppead) at the Federal University of Rio de Janeiro (UFRJ), at the time the proposal came to the public.

Although the federal budget for discretionary spending is largely “rigged”, analysts interviewed by People’s Gazette pointed out the potential of up to R$700 billion in expenses that could be cut in ten years.

Apart from the indifference towards spending control, the economic team’s efforts to increase revenue may end up proving fruitless, as it depends in most cases on the collaboration of the Judiciary or Congress, where the Planalto has struggled to win a majority. every vote.

There is at least R$168 billion foreseen in the 2024 Budget that depends on the other Powers to materialize. But Gabriel Leal de Barros, chief economist at Ryo Asset, considers that even if the measures materialize, the estimated increase in revenue would not be achieved.

Not to mention the fact that the expenses calculated for next year in the budget also deviate from reality, in his assessment. “Ultimately, there are almost R$20 billion in underestimated expenses, in a context in which revenue is overestimated,” said the economist in a recent interview with People’s Gazette.

Another aspect questioned by public accounts experts is the lack of rigidity in relation to the need to comply with targets. Even after changes in the Chamber and the Senate, the new rule leaves the President of the Republic free from imputation of a crime of responsibility if he fails to comply with fiscal objectives.

Instead, there are forecast triggers for adjustment throughout the year and a greater limitation on spending growth if the target is not reached. But if he is unable to bring the primary deficit to zero in 2024, as established by the law that established the new framework, Lula will only need to curb spending in 2026.

This Tuesday (31), the Mixed Budget Committee (CMO) must vote on the preliminary report of the 2024 Budget Guidelines Bill (LDO) and open a deadline for amendments to the proposal. If the initial document is approved, the government will still be able to change next year’s fiscal target, but by sending a letter to the rapporteur, no longer by means of a modifying message.

In September, the LDO rapporteur, deputy Danilo Forte (União-CE), said in a hearing at the Legislative Assembly of the State of Rio de Janeiro (Alerj) that he had “pity” for Haddad due to his effort to reach the goal of zeroing the primary deficit.

“One person I feel sorry for today in Brazil is Haddad, because he makes the speech about a zero fiscal target, but everyone knows that a zero fiscal target is almost impossible given the difficult economic situation we are experiencing and even more so with this enormous amount of public spending that arrives in our accounts every day”, said the parliamentarian.

Despite this, the deputy has already signaled that a proposal for a change in the target will not come from Congress, which, according to him, must come at the initiative of the Executive.