Lula gives command to change 2024 fiscal target, says rapporteur

Budget

Lula’s statement not only opens the door to discussing the review of the target, but serves as a command for it to occur

Brasilia DF) – The statement by President Luiz Inácio Lula da Silva (PT) that the 2024 fiscal target does not need to be zero deficit is seen as a command for the change to be enshrined in the National Congress, says deputy Danilo Forte (União Brasil-CE ), rapporteur of the draft budget guidelines for next year.

He states that the head of the Executive’s speech puts Minister Fernando Haddad (Finance) “in a certain embarrassment” as the country’s highest authority admits that the goal is not feasible. On the other hand, it also means an opportunity that puts next year’s Budget on a more real and feasible basis.

“I think we have a reality check here. But sometimes it is better than remaining in an insecure environment, which can even bring a lack of credibility”, says the deputy. “Now it’s time to redo the math with what we already have and finalize the budget proposal. It is prudent for the government to reevaluate.”

For the rapporteur, Lula’s statement not only opens the door to discussing the revision of the target, but serves as a command for it to occur.

“Now, he determined [a mudança da meta]. Despite all the minister’s efforts, the president himself threw in the towel and admitted that it is not feasible. So, let’s move on to what is doable,”

he said.

For him, it is necessary to wait for the government’s official position, but he remembers that market agents have been talking about a deficit “around 0.75%” of GDP (Gross Domestic Product) next year.

Forte had already defended the change in the fiscal target in an interview with Folha at the beginning of August. At the time, the statements bothered Haddad’s team, which advocated maintaining a more ambitious objective to obtain support from Congress for the approval of measures that increase tax collection.

Despite this, as the report showed, Haddad’s goal faces skepticism within the government itself. According to reports, Minister Simone Tebet (Planning and Budget) herself even defended a more flexible target, with a deficit of 0.5% of GDP (Gross Domestic Product).

At the time, Tebet argued that there were considerable obstacles to ensuring the approval of so many measures to increase revenue. The government sent the 2024 Budget proposal with R$168.5 billion in extra revenue to close the accounts and meet the zero deficit target.

The market itself does not show belief in the fulfillment of Haddad’s target and projects a deficit of 0.75% of GDP, according to the most recent Focus Bulletin, from the Central Bank.

Haddad, however, has been insisting on maintaining the zero target for 2024. To this end, he has as an ally the president of the Central Bank, Roberto Campos Neto, for whom it is important for the government to persist in the objective to demonstrate commitment to fiscal rebalancing — something that could including influence on the institution’s interest decisions.

*With information from Folha

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