Lula brings together economic ministers and receives scenarios for changing the fiscal target

BRASILIA – President Luiz Inácio Lula da Silva met this afternoon with the ministers of the economic area to receive possible scenarios for forwarding the change of the 2024 fiscal target.

O Estadão found that Lula did not bang the gavel at the meeting, but the perception of close ministers remains that he will end up deciding on the change in 2023, and will not wait for do so in 2024, as the Minister of Finance preferred, Fernando Haddad.

Today, the 2024 target foresees zero deficit in public accounts. The discussion revolves between changing to a gap of 0.25% or 0.50% of the Gross Domestic Product (GDP).

Haddad participated in the meeting, but said little. Not even about the potential of the fundraising measures that he hopes to approve in Congress, with the Provisional Measure (MP) that changes the taxation of incentives given by States to companies, known as “subsidy MP”. Lula listened to her ministers, but made no comments either.

If the president confirms the change, the formal referral will be made by the rapporteur of the Budget Guidelines Law (LDO), Danilo Forte (União-CE), or through a member of the government in the Mixed Budget Committee (CMO). The Ministry of Planning will then forward additional data to the project for the annex of goals in the LDO.

The idea of ​​making the change via the government’s amending message to the LDO project was practically discarded due to deadlines in the CMO regulations.

According to Lula’s aides, the person who most advocated changing the goal through the modifying message was the head of the Civil House, Rui Costa. Ministers Alexandre Padilha (Institutional Relations), Simone Tebet (Planning) and Esther Dweck (Management) defended waiting for more information on the approval of projects that could increase government revenue, such as MP 1185, from the subsidy.

Before the meeting, rapporteur Danilo Forte met with ministers to discuss the implementation of the change. Haddad was not at this meeting, in which he was represented by the executive secretary of the Ministry of Finance, Dario Durigan.

It was the second time that Danilo was at Planalto this week. The other was on Monday night, when he met with Minister Padilha. Today, Forte repeated to ministers what he has been saying in public – that he defends the review of the target and that voting on the LDO can be started, without prejudice to a future change.

To do this, the government would have to propose an amendment, to be accepted by the rapporteur, or convince the deputy to change his opinion by the end of the vote. The two options give Forte additional power in deliberating on the primary outcome target.

The deputy argued, however, that Congress had already planned to start voting on the LDO and that, without this, the entire vote on the Annual Budget Law (LOA) is delayed. The LOA rapporteur, deputy Luiz Carlos Motta (PL-SP), told Estadão in September that the process was already delayed.

With this approach, the government gains time until after the second holiday of the month, on November 15th, in commemoration of the Proclamation of the Republic, to make a decision, including the value of the new target. The reading and voting on deputy Danilo Forte’s preliminary report are already scheduled for next week.

A source reported that the meeting of ministers with Lula functioned as a kind of “informal” meeting of the Budget Execution Board (JEO), which would dispense with meeting that was being scheduled for next Monday.

The discussions have intensified in recent days because Lula does not want the goal to be a restrictive factor in the execution of investments and public policies in 2024, the year of municipal elections. He wants to eliminate the risk of a budget blockage.

The president gave the password in the meeting with deputies this Tuesday, 31st, when he said that will not cut even one comma from the expenses foreseen in the 2024 budget piece. The president’s main concern is with investments, such as the PAC, which would be the first target of a possible contingency at the beginning of the year.

The opinion is repeated behind the scenes by ministers: expenditure already programmed must be preserved from a possible blockage that could occur due to the zero target. Therefore, if there is frustration in revenue, the path must be to review the target to accommodate a deficit in public accounts.

Among experts in the economic area, it is estimated that changing to a deficit target of 0.25% would already be enough to avoid a blockage, as the new fiscal framework allows a margin of tolerance up and down of 0. 25 percentage point of GDP.