New framework uses inflation calculation that should be more beneficial for the government in 2024

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Expenses will be corrected by the accumulated inflation from January to June, plus the projection for the months of July to December. This gives the government leverage to increase spending. The text of the new fiscal framework, released this Tuesday (18), provides that the base of spending limits will grow by the accumulated inflation from January to June, plus the projection for the months of July to December. The new calculation, which takes into account the entire year of 2023, and not just the 12-month inflation accumulated until the middle of the year (June), should give the government an advantage for increasing spending in 2024, according to economists. See the full text of the new fiscal framework project It will work like this: Expenses for the Executive and the other Powers in 2024 will be based on the 2023 expenses provided for in the budget law, plus inflation from January to December of this year. In order for expenses to grow above inflation – a determination of the new framework – the variation in revenue from July of the previous year to June of the current year will also be considered. ALSO READ: Fiscal framework: president will have to justify himself to Congress in case of non-compliance with goals Fiscal framework and tax reform complement each other in the government’s plans for the economy; understand Arcabouço foresees a list of expenses that will not be included in the new fiscal rule Initially, the government had hinted that the expense and revenue would use the period from July 2022 to June 2023. According to specialists, the choice of this correction period also for expenditure would harm the government in 2024. The inflation used will be the Extended National Consumer Price Index (IPCA), considered the country’s official inflation. With the change in the correction interval, the forecast is that government expenses will have a real advance (above inflation) of 2.3%, according to Felipe Salto, chief economist at Warren Rena. If confirmed, it will be close to the real growth limit established by the new framework, which is a real growth of up to 2.5%.

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