Tebet predicts a BRL 120 billion shortfall this year, higher than the official estimate – 03/23/2023 – Market

One day after the government revised its official forecast for the public accounts, with a deficit of R$107.6 billion, the Minister of Planning and Budget, Simone Tebet, said she expected a bigger gap, of R$120 billion.

The minister said that the economic team will still need to incorporate into the estimates the additional expense with the extra readjustment of the minimum wage, from R$ 1,302 to R$ 1,320 as of May 1st.

Although the increase had already been announced by President Luiz Inácio Lula da Silva (PT), the government preferred not to include this expense in the Budget now. The estimate is that the measure will cost another R$ 4.5 billion.

The justification is that the legal act of the new increase has not yet been edited. But the maneuver contributed to the government being able to show a smaller deficit in its first revenue and expenditure assessment report.

“It is a projection, but it is moving in the direction we want, that the fiscal deficit in Brazil will not end with R$ 230 billion, but something around, now with this projection, of R$ 107 billion. We may have a small change when the minimum wage is readjusted, around a few more expenses, [déficit de] R$ 120 billion”, said the minister.

As shown to Sheetbefore the decision to remove the additional spending on the minimum wage from the estimates, the government’s internal projections indicated a bigger gap, close to R$ 120 billion —precisely the number cited by Tebet.

The minister’s evaluation is also more pessimistic than the declarations of the secretary of the National Treasury, Rogério Ceron. In an interview with the newspaper O Globo, Ceron said that the final result of the accounts could show a gap of up to R$ 40 billion less than projected this Wednesday (22).

“I believe it is credible to think of a reduction of more than R$ 30 billion to R$ 40 billion in relation to this first assessment”, he said to the newspaper.

In January, the Minister of Finance, Fernando Haddad, announced a series of measures to reduce the “absurd” deficit of more than R$ 220 billion.

The package provided for a potential adjustment of BRL 242.7 billion, but already at the time he recognized that some actions may not be confirmed. For this reason, part of the measures has not yet been incorporated into the official Budget estimates.

Haddad has said that the goal is to close the year 2023 with a deficit of up to 1% of GDP (Gross Domestic Product), equivalent to around R$ 100 billion.

This Thursday, Tebet reverberated that goal. “We are talking about reducing 2.3% of GDP deficit [Produto Interno Bruto] Brazilian market by the way, in a projection of reducing to 1% of the GDP. We are talking about halving this fiscal deficit by the end of the year,” said the minister.