Public accounts have worsened by almost R$260 billion until November, reveals Central Bank

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The increase in the deficit is related to the increase in expenses provided by the transition PEC and the decline in revenue. Public debt registered a small increase in the month before last, to 73.8% of GDP. The consolidated public sector accounts recorded a primary deficit of R$119.55 billion in the first eleven months of this year, the Central Bank reported this Friday (5). In the same period of 2022, public accounts had recorded a surplus of R$137.8 billion, or 1.5% of GDP. The worsening, accumulated this year, therefore, was R$ 257.36 billion. The primary deficit occurs when tax expenditures exceed revenues, disregarding interest on public debt. When the opposite happens, there is a surplus. The result encompasses the federal government, states, municipalities and state-owned companies. The partial negative balance for the year represents the worst result for this period since 2020, when, at the beginning of the Covid-19 pandemic, the government increased spending on benefits for the population. From January to July of that year, the deficit in public accounts totaled R$651.11 billion. See below the performance that led to the negative balance of public accounts in the first eleven months of this year: federal government recorded a deficit of R$137 billion; states and municipalities had a surplus balance of R$20.7 billion; state-owned companies presented a deficit of R$3.21 billion. In November alone, public accounts recorded a negative result of R$37.27 billion, compared to a negative balance of R$20.9 billion in the same month last year. Increase in spending and revenue The increase in the deficit in public accounts in the first year of the new administration is mainly related to the increase in expenses authorized through the transition PEC, approved at the end of last year by the elected government of President Luiz Inácio Lula da Silva. With the change, the government obtained authorization to spend R$168.9 billion more this year. Part of the amount was used to make the R$600 Bolsa Família benefit permanent. Spending on health, education and scholarships, among other public policies, was also recovered. To try to avoid a further worsening of public accounts, the economic team has worked mainly to increase revenue. With this objective, these measures were approved: Return of the quality vote in Carf, the collegial body responsible for judging appeals from companies fined by the Federal Revenue – with expected revenue of R$ 54.7 billion in 2024. MP that changes the taxation of incentives (subsidies) granted by states on the Tax on the Circulation of Goods and Services (ICMS) – with expected revenue of R$35 billion this year. Changes in the interest on equity regime, which consists of a way of distributing the profits of a publicly traded company (which has shares on the stock exchange) to its shareholders. Taxation of “offshore” and so-called exclusive funds; Taxation of the electronic betting market on sports games; Tax collection from companies that transfer goods to partner companies abroad. Despite the measures, federal revenue fell in part this year due to the delay in its approval, and also due to the decline in non-recurring revenues, related to concessions, “royalties” and PIS/Cofins due to the drop in the price of oil, among others. This year, the government also approved the new fiscal framework, that is, the rules for public accounts replacing the spending ceiling. The objective is to return to having accounts in the black from 2024, considered bold by the financial market. Despite these initiatives, economists have criticized the lack of more concrete actions on the part of the economic area to cut public spending. The economic area has promised that spending cuts will also be evaluated.

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