Planning foresees a primary deficit of R$ 107.6 billion this year

Measures to increase revenue and review expenditures announced so far should make the primary deficit in 2023 fall from R$ 228.1 billion to R$ 107.6 billion, equivalent to 1% of the Gross Domestic Product (GDP), disclosed this Wednesday (22) the Ministry of Planning and Budget. The number appears in the Bimonthly Report for the Evaluation of Revenues and Expenses, a document that guides the execution of the Budget and is published every two months.

The estimate is a little worse than that of the Ministry of Finance. Last week, the Secretariat for Economic Policy announced that the deficit forecast would be R$ 99.01 billion. The primary deficit is the negative result of government accounts without public debt interest.

The report also brought a small contingency (block) of BRL 910 million in discretionary (non-mandatory) spending. The blockade could be greater if the government had not revised downwards the mandatory expenditure projections by BRL 9.7 billion in relation to what was sanctioned in the 2023 Budget.

With regard to mandatory expenses, estimates of expenses with Bolsa Família (-R$ 7 billion) were revised downwards, due to the updating of the registration and the elimination of fraud, and with Social Security benefits (-R$ 5, 8 billion).

However, projections for other expenses were high, such as BRL 4.1 billion in extraordinary credits and BRL 3 billion to comply with the second phase of the Aldir Blanc Act, which provides for aid to cultural projects affected by the covid-19 pandemic. When adding mandatory and discretionary spending, total expenses were revised downwards by R$10.6 billion.

Revenues

On the revenue side, the report increased by R$ 110 billion the net revenue collection estimate for this year in relation to the original value of the 2023 Budget. (Cofins), with an extra R$54.6 billion.

Next comes the transfer to the National Treasury of R$ 26 billion from the quotas of the former fund of the Social Integration Program (PIS) and the Program for the Formation of Public Servant Assets (Pasep), authorized by the Constitutional Amendment of the Transition. This fund, which operated from 1971 to 1988, received resources destined for workers. Despite several government campaigns over the past six years, around 10 million workers still did not withdraw the resources.

Income Tax collection estimates (+R$ 18.7 billion) and R$ 9.2 billion from PIS/Pasep were also revised upwards.

spending cap

The Bimonthly Report for the Evaluation of Revenues and Expenses foresees a break of R$ 13.6 billion in the spending ceiling, which will soon be replaced by a new fiscal rule. The ceiling would be broken this year, but the Constitutional Amendment of the Transition, enacted at the end of last year, removed BRL 145 billion from the Bolsa Família spending limit and up to BRL 23 billion in investments, in case there is excess revenue.