The Secretary of the National Treasury, Rogério Ceron, said this Thursday (1st) that the target of zero primary deficit in 2024 is “bold”, but important for the country and possible to be achieved, despite involving challenges.
Ceron also said that the exemption of profits and dividends, which companies distribute to shareholders, deserves to be discussed within a broad reform of Income Tax (IR). “Unlike income from work, for which the worker has to pay Income Tax, income from capital is exempt.” The secretary stated, in an interview with the Poder360 website, that the exemption “was never re-discussed” and that “the Treasury’s understanding is that this discussion process is worth it”. “But this has to be done within the framework of broader income reform.”
Ceron’s statement about the zero deficit comes at a time of lack of market confidence in the government’s ability to achieve this year’s fiscal objective, after the Union recorded a deficit of R$230.5 billion — the second worst in history. “It is important to have a bold goal and work to achieve it,” said the secretary. “We believe it is possible. The economic environment is good, it is favorable, and last year we managed to adopt important measures that recover the fiscal base”.
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He also said that January’s revenues were in line with plans and that every month the government reevaluates and seeks measures to maintain this performance.
Ceron also stated that there is still no decision between the Luiz Inácio Lula da Silva (PT) government and the National Congress in the negotiation on the provisional measure that reinstates the payroll of sectors of the economy (MPV 1202/2023). For the secretary, any flexibility in the text will need to be accompanied by measures to compensate for revenue losses.
Ceron also said that, “to provide security to public agents”, the government sent a query to the Federal Court of Auditors (TCU) on the federal expenditure contingency rule, if a mismatch between the fiscal target and the performance of your income and expenses.
The Ministry of Finance argues that any spending contingency will necessarily ensure a growth in expenses for the year of at least 0.6% above inflation (the floor established by the new fiscal framework). In practice, this lock would limit the block to around R$23 billion this year and would be imposed even if the zero deficit target is not met.
The National Treasury Secretariat (STN) is subordinate to the Ministry of Finance. On Monday (29), Minister Fernando Haddad (PT) attributed the deficit of R$ 203.5 billion in 2023, equivalent to 2.1% of the Gross Domestic Product (GDP), to the government’s decision to “pass the ruler” in what he called a “dark legacy of disorganization of public accounts”.
The hole was only smaller than that of 2020, when the Budget was impacted by spending on the Covid-19 pandemic. The government paid not only the outstanding court orders (debts of the Union with final and unappealable judgment), but also the debts from the agreement made with governors to compensate for the reduction in ICMS on fuel, electricity and telecommunications on the eve of the 2022 election, two measures adopted by the Jair Bolsonaro (PL) government.
“The decision, in my opinion, was the right one,” said the minister. “We went to the Supreme Court to defend the thesis that that default [a PEC dos precatórios] it was unconstitutional. And I think that public opinion, formed and informed, should take into consideration this government gesture of putting order in the accounts.” Haddad also said that the real deficit approached 1% of GDP, a number he had mentioned last year, and that “the market understood and reacted well to what was planned”.
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