Public spending: Rui Costa says there will be no increase – 11/03/2023 – Market

The Minister of the Civil House, Rui Costa, stated this Friday (3) that there is no possibility of increasing public spending, regardless of the government’s decision on the fiscal target.

“Regardless of the goal, the total expenditure on investment plus funding is given. There are two restrictions that the framework has. This is already defined there, which is the percentage of 70% of revenue for the last 12 months, counting from the middle of the year” , stated the minister.

“There is no possibility, regardless of the debate on the target. There is no possibility of increasing public spending, neither investment nor funding”, he added.

Rui Costa also added that there is no news about a possible change in the fiscal target.

Rui Costa was referring to the mechanisms present in the new fiscal rule, which was approved by the National Congress in August.

The new fiscal framework allows expenses to grow above inflation, as long as the range of 0.6% to 2.5% advance is respected. The definition of the exact percentage depends on revenue: the formula predicts that they will grow by the equivalent of up to 70% of the real increase in revenue in the 12 months accumulated up to June of the previous year (in this case, 2023).

The minister also added that there is no “dichotomy” within the government, between a more spending wing and another that is more adept at fiscal responsibility measures.

“I saw some articles [na imprensa] trying to create a counterpoint between a part of the government that is a spender and another that is a saver. There is no debate, there is no dichotomy, because there is no possibility of increasing spending, because the framework does not allow it”, added the head of the Civil House.

The speech took place after a meeting between President Luiz Inácio Lula da Silva (PT) and infrastructure ministers. Rui Costa himself and the head of the Treasury, Fernando Haddad, were present.

Ministers Renan Filho (Transport), Silvio Costa (Ports and Airports), Alexandre Silveira (Mines and Energy), Juscelino Filho (Communications), Waldez Góes (Regional Development), Jader Filho (Cities) and Paulo Pimenta (Secom, Secretariat of Social Communication), in addition to Geraldo Alckmin, vice-president and minister of Mdic (Development, Industry, Commerce and Services).

During the meeting, Lula stated that good money is transformed into works, not kept in the National Treasury. The head of the Executive asked ministers to be the “best spenders of money on works of interest to the Brazilian people”.

“We cannot leave money left over that is expected to be invested in the ministries. We need to put it in, transform it. I always say that, for those in the Treasury, good money is money in the Treasury. For those in the Presidency, good money is money transformed into works”, said Lula.

The statements about public spending are made amid the debate about changing the 2024 fiscal target, sparked after Lula himself spoke last week stating that the zero deficit mark will “hardly” be reached.

At a breakfast with the press on the 29th, the president also stated that the fiscal deficit target does not need to be zero and that he is not willing to make cuts in investments to pursue it.

“Let me tell you something. Everything we can do to meet the fiscal target, we will meet it. What I can tell you is that it doesn’t need to be zero. We don’t need that. I’m not going to establish a fiscal target that obliges me to start the year by cutting billions in works that are a priority in this country”, said the president, in response to a question from the Sheet, during breakfast with the press.

Lula’s statements were seen as a hard blow to Haddad, who had still been defending eliminating the deficit in 2024 and has avoided answering in recent days whether there will in fact be a change in the objective.

Even so, as shown by Sheet, members of the government began to discuss sending a message to the National Congress reviewing the target of zero deficit in public accounts. According to members of the Palace, the target under debate would be 0.5% for 2024. But it can be reevaluated.

This Friday morning (3), the Minister of Finance told journalists that “as soon as I have news, I will report it”.

In the same vein, Rui Costa also stated that there is still no news about a possible review of the fiscal deficit target. Seeking to alleviate rumors of uneasiness with Haddad, the head of the Civil House also added that it will be up to the Minister of Finance to announce possible changes.

“The moment there is news about this [meta fiscal]as Minister Haddad recently said in an interview that I had the opportunity to follow, I wanted to mention him [Haddad] and just reaffirm that the moment the government has news about this, the Minister of Finance will be the first to talk about the topic”, stated Costa.

“Until then, we will not talk about this topic with the press, until the government has a position that will be announced, publicized by it”, he adds.