There will be events and blocking of funds “perhaps” in the 2024 Budget, although the numbers have not yet been finalized, said the Minister of Finance, Fernando Haddad, this Tuesday (16). Next Monday (22), the Bimonthly Income and Expenditure Report will define how much the government will have to contingency or block to comply with the spending limits and the zero deficit tolerance margin, expressed in the new fiscal framework.
“There may be as many obstacles to the Budget if any expenditure exceeds 2.5%. [de crescimento acima da inflação]. You will remember that we have a ceiling that cannot be exceeded, which is 2.5%. So this work is being done to check what will be required [cortar ou contingenciar]”, said the Minister.
“Anything over 2.5% has to have a blocking counterparty. And, in case [falta de] income, it is incidental, because we still have this issue until the STF decision is met [Supremo Tribunal Federal] under compensation [da desoneração da folha de pagamento]”, said Haddad.
Contingency and blockade are temporary spending cuts. With the new fiscal framework, however, different incentives were established. A lock-in occurs when government spending increases by more than the threshold of income growth of 70% above inflation. Contingency occurs when there is a lack of revenue that affects the achievement of the main result target (interest-free government account yield on public debt).
The Minister said that the contingency and blocking numbers for Budget 2024 should only be finalized in the coming days. According to Haddad, the meeting in which President Luiz Inácio Lula da Silva decided to cut R$25.9 billion in mandatory spending did not refer to the preparation of the 2025 Budget, which began this month.
“There has been no meeting with the President by 2024 yet. Let me tell you this is important. The meeting we had two weeks ago with President Lula was about the 2025 Budget Because we had to release quotas for the Ministries [para o próximo ano]. You deliver the budget on August 31 to Congress, but the preparation of the Budget takes 60 days within the Executive”, explained Haddad.
Interview
Haddad spoke to journalists before meeting President Lula at Palácio do Planalto, where he will discuss measures for the food industry. After the Minister left the building, advisers to the Ministry of Finance released a speech from President Lula’s interview with TV Record in which the president promised to fulfill the fiscal framework.
“We will do whatever is necessary to meet the fiscal framework. I said in the campaign that we were going to create a country with political, legal, fiscal, economic and social stability. This responsibility, this commitment – I can say it to you as if I were saying it to one of my children, to my wife –, fiscal responsibility that I did not learn in college, I bring it from the cradle”, said An President Lula in an excerpt issued by the Ministry of Finance and the Secretariat of Communications of the federal government.
Earlier, the release of another excerpt from the interview caused an uproar in the financial market. In the speech released by the broadcaster, Lula hinted that he could change the main deficit target that established the framework. “It’s just a matter of vision. You are under no obligation to set a goal and stick to it if you have more important things to do. This country is very big, this country is very powerful. What is small is the leaders of this country and the leaders of some speculators,” said Lula to the broadcaster.
Haddad said the phrase was taken out of context. According to the Minister, Lula was, in fact, referring to the concessionary concession that established the fiscal framework for the primary result target, with 0.25 percentage points of the Gross Domestic Product (GDP, the sum of the wealth produced in the country), up. or down. “He said it could be -0.1% of GDP, it could be 0%, it could be 0.1%, do you understand? This is even within the band of the fiscal framework”, Haddad emphasized.
Payroll exemption
Regarding the payroll tax exemption, whose income-reimbursing project is being analyzed by the Senate, Haddad said he is close to reaching an agreement with the Senate. “We reached a comfortable text for the Exchequer and we are negotiating with the Senators, they are the ones who have to approve the compensation. As long as you close the compensation, you have to close the number. That is our problem, it is to close the number,” he declared.
Last week, Haddad said that the project must focus on R $ 18 billion as a source of increased income to compensate for the extension to 2027 of the payroll exemption for 17 sectors of the economy and small municipalities. The number is lower than the initial estimate of R$26.3 billion.
According to Haddad, the Congress will have to calculate the impact for the four years related to the extension of the tax benefit to give peace of mind for the years to come. “Since it’s a four-year salary ladder, I have to have a series of measures to compensate for this number. Then, we will have a clear sky, we will have peace of mind to complete the budget for this year and for the next year in terms of stability. If all goes as planned, we will present a very comfortable Budget on 31 August. Perhaps the best of the last ten years”, said the Minister.