The Ministry of Economy has substantially improved its forecast for the central government fiscal result in 2022in its last official review of the numbers before the elections, starting to predict, for the first time, a surplus, which would mark the return of the accounts to the blue after consecutive leaks since 2014, but announced an additional cut of R$ 2.635 billion in funds from ministries to respect the spending ceiling.
The official estimate points to a surplus of BRL 13.548 billion for the year, compared to a deficit projection of BRL 59.354 billion made in July, as presented this Thursday (22) in the ministry’s bimonthly report on revenues and expenses, which assesses compliance with the fiscal target and the cap rule. The projection, therefore, came in R$ 72.902 billion better than what it had been two months ago.
The previous report predicted a primary deficit corresponding to 0.6% of GDP (Gross Domestic Product). Now, the forecast is for a surplus of 0.1% of GDP.
The balance concerns the central government, which gathers the Treasury, Social Security and Central Bank accounts and does not account for expenses with the payment of interest on the public debt.
On the one hand, the government increased the projection of net revenues by R$ 69.948 billion compared to the previous projection, at R$ 1.844 trillion. Estimated total expenses were reduced by R$2.954 billion in the year, to R$1.831 trillion.
The strong acceleration in revenues was driven by gains from dividends and the exploitation of natural resources, in addition to an increase in the collection of taxes such as Income Tax, Social Contribution on Net Income and Import Tax.
Faced with successive revenue records, driven by inflation and high prices for oil and agricultural commodities amid the war in Ukraine, the ministry has made more positive forecasts for the fiscal balance at the end of the year.
The numbers continue to improve, despite a series of government actions this election year that reduce revenues and increase expenses, such as tax cuts on fuel and industrialized products and additional transfers to social programs.
In early August, internal calculations by the Ministry of Economy already pointed to the achievement of the first primary surplus in nine years, also helped by the receipt of hefty dividends from Petrobras.
The positive balance in 2022, if confirmed, will be much better than the primary deficit target of R$170.5 billion set for this year.
The last limitation of funds to respect the ceiling, effective in July, totaled R$ 12.7 billion. After the announcement, the government edited provisional measures to postpone new spending approved by Congress and made other reallocations of expenses. Treasury data show that the blockage in the accounts after these adjustments, and before the review released on Thursday, was R$7.9 billion.
The additional cut of R$ 2.6 billion, reaching a total of R$ 10.5 billion, will be necessary, according to the ministry, after an adjustment in the estimate of mandatory government spending. Expenses will be higher in the Pensions heading.
The need to cut is explained by the restriction imposed by the cap rule, which limits the growth of public expenditures to the variation of inflation and there is no room for increased expenditures, even after flexibilization of the rule approved by the government.
Details on which ministries and items will be affected by the blockade will be formalized by the end of the month, even before the first round of elections, which has former President Luiz Inácio Lula da Silva leading the voting intentions, and President Jair Bolsonaro in the poll. second position.
Until the end of the year, the government can review the accounts and reduce or increase the blockade, depending on the analysis of compliance with tax rules.
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