2023-11-17 23:41:58
SÃO PAULO (Reuters) – The Minister of Finance, Fernando Haddad, stated this Friday that the contingency of ministries’ funds in 2024, if the Budget does not perform as expected, could be between 22 billion and 23 billion reais, a value lower than that indicated by economists.
In an interview with journalists in São Paulo, the minister argued that blocking the accounts cannot take government expenses to a level lower than that stipulated by the new fiscal framework, which establishes that federal spending could increase by 0.6% to 2 .5% above inflation annually.
“In the fiscal framework that was approved, which was internationally celebrated as an innovation for the country, public expenditure for the following year cannot be less than 0.6% in real terms nor greater than 2.5% in real terms. This is a kind of channel through which public expenditure will flow”, said the minister.
“The contingency could reach I think 22 or 23 billion reais”, he added.
The government will carry out the first assessment of revenue and expenditure performance for the year in March 2024. The legislation defines that if the economic team identifies that the fiscal target will not be met, there is a need for contingencies, a limitation of disbursements from ministries.
The value mentioned by Haddad differs from the assessment of economists, who, given the difficulty of approving measures in Congress to increase revenue, are betting that the government will be far from meeting the target of zero primary deficit for the year and will be forced to contingency a relevant portion of the Budget.
Warren Rena’s chief economist, Felipe Salto, projects that the government will have a primary deficit of 0.74% of GDP in 2024, which will force the government to make a contingency of 39.6 billion reais.
“If the contingency becomes more limited than that, the deficit could be worse, that is to say,” he said.
(By Fernando Cardoso, in São Paulo, and Bernardo Caram, in Brasília)
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