Public accounts have worse results in Lula’s first year in office

National treasure

Comparison considers data up to the month of August; Minister Fernando Haddad promises to eliminate deficit in 2024

Brasilia DF) – The central government’s accounts had a deficit of R$104.6 billion in the first eight months of this year. This is the worst result in this comparison for a first year of a presidential term, according to data from the National Treasury.

The deficit indicates that the government spent more than it collected in the period. The data aggregates statistics from the Treasury, Central Bank and National Social Security Institute (INSS).

In his first two terms, President Luiz Inácio Lula da Silva (PT) delivered a positive balance in the accounts in the first eight months. In 2003, the result was a surplus of R$107.8 billion. In 2007, performance was even better, at R$129.2 billion. The data is already updated for inflation.

The current economic situation, however, is quite different from that observed at that time.

The country has already had a history of account deficits since 2014, when the president was Dilma Rousseff (PT). The only exception was 2022, when the boost in royalty revenue contributed to former president Jair Bolsonaro (PL) delivering a surplus in his last year in office.

Furthermore, even before taking office, Lula needed to negotiate with Congress the approval, in December 2022, of a proposed amendment to the Constitution (PEC) to increase spending by up to R$168 billion this year.

The objective was to guarantee the maintenance of social policies, such as Bolsa Família, and other basic actions for the maintenance and functioning of public policies.

After that, Minister Fernando Haddad (Finance) has been trying to promote what he calls the recomposition of the State’s fiscal base, with measures to increase revenue. The results, however, have so far been more timid than initially projected by the government.

The comparison of the results observed in the first year of the head of the Executive Branch, made by the National Treasury, does not include the Michel Temer (MDB) government, which took office in May 2016 — in other words, a comparative cut of the first eight months is harmed .

This year, the fiscal target allows for a deficit of up to R$216.4 billion, equivalent to 2% of GDP (Gross Domestic Product).

Upon taking office, Haddad promised a loss of up to 1% of GDP in the first year of his administration, but government projections so far indicate a negative result of R$141.4 billion (1.3% of GDP).

For next year, the Finance Minister’s promise is to bring the deficit to zero. The government introduced a series of adjustment measures on the revenue side to seek this rebalancing, with the objective of increasing revenue by R$168.5 billion.

*With information from Folha de S.Paulo

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