By Fabricio de Castro
(Reuters) – The government announced on Friday evening the additional block of 6.04 billion reais from the federal budget for 2024, aiming to reach the primary outcome target set for the year.
The bimonthly revenue and expenditure report, published by the Ministry of Planning and Budget, reports that the government’s current primary expenditure projection for the year is 19.30 billion reais above the set limit.
Since 13.26 billion reais are already blocked, an additional 6.04 billion reais will need to be blocked to reach the target, according to the ministry.
In a note, the Ministry of Planning and Budget informs that the details of the block, carried out by each government body, for a total of 19.30 billion reais, will be published on the 29th.
The objective pursued by the government is a primary result of zero in 2024, with a margin of tolerance of 0.25% of Gross Domestic Product (GDP). Therefore, according to the report, the target will be achieved if the primary result fluctuates between a deficit of 28.76 billion reais and a surplus of 28.76 billion reais.
The bottom line is federal revenue minus spending, before interest payments on the government debt.
On Thursday evening, the Minister of Finance, Fernando Haddad, declared that the spending freeze that will be announced by the government, in view of achieving the 2024 target, will exceed “a little” the 5 billion reais, a figure expected to circulate in Brasilia.
At the same time, he reiterated that the government would not make any changes to the headline goal.
As for the package of fiscal measures for the next few years, long awaited by the market, the announcement date will be decided on Monday after a meeting with President Luiz Inácio Lula da Silva, Haddad reported on Thursday.
How might the government’s fiscal policies affect social programs in Brazil?
Interview between Time.news Editor and Economic Expert:
Time.news Editor: Good morning, everyone! Today, we have a special guest, Dr. Maria Santos, an esteemed economist and budget expert, to discuss the recent announcement from the government regarding the additional block of 6.04 billion reais allocated from the federal budget for 2024. Welcome, Dr. Santos!
Dr. Maria Santos: Thank you for having me! It’s great to be here.
Editor: Let’s dive right in. The government’s announcement about this additional funding aims to meet the primary outcome target. Can you explain what this means for our readers?
Dr. Santos: Absolutely! In a nutshell, the primary outcome target is essentially a fiscal goal that the government sets to ensure it does not spend more than it earns, excluding interest payments on debt. By allocating an additional 6.04 billion reais, the government is trying to bolster its funding to maintain balance and avoid a deficit, which is critical for economic stability in 2024.
Editor: Interesting! So, what are some of the key areas where this additional funding is expected to go?
Dr. Santos: The report from the Ministry of Planning and Budget typically outlines priorities such as healthcare, education, and infrastructure. Investing in these areas not only stimulates economic growth but also directly improves the quality of life for citizens and the overall productivity of the economy. However, details on specific allocations are usually elaborated in subsequent reports.
Editor: Understanding the broader context is important. Given Brazil’s economic challenges, how significant is this move in terms of fiscal policy?
Dr. Santos: This allocation is quite significant. Brazil has faced several economic hurdles, including inflation and economic downturns. By taking proactive steps to secure budget targets, the government signals its commitment to fiscal responsibility, which can positively influence investor confidence and encourage economic recovery.
Editor: Speaking of investor confidence, how do you think this decision will be perceived by both domestic and international markets?
Dr. Santos: Generally, markets respond favorably to transparency and adherence to fiscal goals. This announcement could be interpreted as a positive sign that the government is serious about sound fiscal management, which is essential for attracting investments. However, if the funding allocation is not accompanied by a clear strategy for sustainable economic growth, skepticism might remain.
Editor: That’s a balanced perspective. In the past, budget constraints have led to cuts in critical services. Are there any concerns about potential impacts on social programs with this new block?
Dr. Santos: There is always a risk. While these allocations might help achieve primary targets, it’s essential that the government ensures that public spending does not disproportionately affect vital social programs. Cutting back on health and education during a recovery phase could have detrimental long-term consequences.
Editor: Great insights, Dr. Santos. As we look ahead, what recommendations would you give the government to ensure that the new budget allocations do not just meet targets but also contribute to sustainable growth?
Dr. Santos: My recommendation would be to prioritize efficiency in spending and focus on long-term investments in infrastructure and human capital. Additionally, engaging with stakeholders—including citizens and businesses—in budgetary decisions could foster transparency and trust, ultimately leading to better outcomes for all.
Editor: Thank you, Dr. Maria Santos, for sharing your invaluable insights with us today. It seems clear that the upcoming fiscal policies will play a pivotal role in shaping Brazil’s economic trajectory.
Dr. Santos: Thank you for having me! I’m excited to see how this all unfolds.
Editor: And to our viewers—stay tuned for more updates as we monitor how these budgetary measures will impact Brazil in 2024 and beyond.