TCU points out ‘overestimated’ revenues and possibility of primary deficit for 2024

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The Court’s expectation is that expenses will exceed revenues by R$55 billion. Report was presented this Wednesday (17). The Federal Court of Auditors (TCU) approved, this Wednesday (17), the report on the 2024 Budget, which highlights a possible primary deficit of up to R$55.3 billion. The primary deficit occurs when tax revenue is below government spending (without considering interest payments on public debt). According to the Court, government revenues were “overestimated” in the Budget Bill (PLOA) drawn up by the federal government and approved by the National Congress in December. Lula sanctions law with rules for the 2024 budget. “The Union’s Annual Budget Bill for the 2024 financial year, the estimate of Net Federal Primary Revenue at 19.2% of GDP is far above what was observed in recent years , indicating that it is overestimated, which leads to the possibility of having a primary deficit of up to R$55.3 billion and non-compliance with the fiscal result target proposed in the LDO Project for 2024”, mentions the report. The report also points out that the expectation of first net revenue of 19.2% of GDP is “optimistic” and does not seem to be feasible, as it deviates from the average pattern of recent years and fits into the second highest historical peak since 1997 History since 1997 regarding the calculation of net primary revenue. Reproduction/TCU For the Court, the methodology used by the Executive Branch to calculate new revenues was not presented in the PLOA, “creating doubts regarding the real collection capacity of legislative innovations”, that is, of the new proposals sent by the government and approved by Congress to try to eliminate the deficit. “The government expects to increase revenue in 2024 through several measures whose consequences are not yet very clear or predictable, such as the re-encumbrance of the payroll, the taxation of offshore companies, the end of the JCP tax deduction (interest on equity ), among others”, details the TCU. If, on the one hand, the report points out that expenses for 2024 are increasing, on the other, it signals that there is a slight reduction in expenses compared to 2016, when the Spending Cap rule was created. This, according to the Court, would prove the positive effect of the rule over time. “Comparing the estimates for 2024, contained in the PLOA 2024, with the values ​​for 2016, total primary expenditure as a proportion of GDP has a projected reduction of 0.7 pp”, cites one of the excerpts of the text. Furthermore, the Court’s analysis also estimated that Public Sector Net Debt (DLSP) will not be sustainable for the next ten years if primary expenditure continues to grow. “The sustainability of the Public Sector Net Debt – DLSP is not expected to be achieved in the next ten years, indicating the need to review the growth of primary expenses downwards”, says another excerpt from the report. The proposal was unanimously approved by the TCU plenary during the first session held in 2024. The rapporteur for the analysis was the responsibility of minister Jonathan de Jesus, son of senator Mecias de Jesus (Republicanos-RR). Pensions During the preparation of the Budget for 2024, the federal government estimated an increase in expenses with social security benefits of R$897.6 billion and a reduction of R$12 billion after, according to the TCU, “taking efficient administrative measures”. The Court indicated, however, that the cost reduction estimate does not contain details on how it was calculated and “evidence” that such measures will have the expected effect. “In the aforementioned technical note, there is only a highlight of a series of measures and projects to be carried out by the INSS that would have the potential to help improve quality and reduce spending on social security benefits, such as qualification of employees, system improvements, improvement of insured person records, data crossing, review of work routines, among others”, indicates the document.

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