Without a fiscal framework, the future of public accounts is uncertain, says IFI

The Independent Fiscal Institution (IFI) of the Senate released this Thursday (16) the Fiscal Monitoring Report (RAF) for March, which pointed out that without the new framework proposed by the federal government and with the increase in expenses, the future of public accounts is uncertain.

“We hope that future signals, particularly the definition of the new fiscal anchor, will contribute to improving the economic and fiscal scenario, in order to promote the sustainability of the public debt in the medium and long term”, says the text on the expectation of disclosure of the new fiscal milestone, which may be announced in the next few days.

The report also brings a revision of the expectation for the primary deficit in 2023, which rose from BRL 118.3 billion (1.1% of GDP) to BRL 125.0 billion (1.2% of GDP) due to the increase in the projection of expenditure.

The Fiscal Monitoring Report (RAF) is the IFI’s monthly analysis of the situation and provides projections for the main macroeconomic and fiscal variables of the Brazilian economy. In the March edition, the projections for 2023 and 2024 were maintained for growth in the Gross Domestic Product (GDP), of 0.9% and 1.4%, and for inflation, of 5.6% and 3.9%, respectively.

Also according to the IFI, the Net Debt of the Public Sector has not increased in the last two years due to the increase in nominal GDP, which partially offset the negative effects of some of the conditioning factors. The report points out that information released by the Treasury shows that the volume of issues has been below redemptions since the beginning of 2022.

“Everything indicates that the Treasury has been using the liquidity reserve to issue a smaller volume of securities due to the high average cost of the public debt”, says the text, which carries a warning: the strategy was possible thanks to factors such as the strong inflow of dividends last year, which increased the liquidity reserve, which may not happen this year. With information from the Senate Agency.