In search of an additional R$300 billion to achieve fiscal targets in 2025 and 2026, the economic team already admits to revising targets | Economy

a The economic team will need to increase revenues, through additional measures, by R$296 billion in 2025 and 2026.To achieve current financial goals.

See details below in this report on financial goals.

The calculation was made by the National Treasury, through the Financial Outlook Report.

• For 2025, this is expected to be needed An increase of 1% of GDP in revenues, i.e. R$123.9 billion (Considering a nominal GDP of R$12.388 trillion estimated by the Ministry of Finance).
• for the year 2026, The indicated need is additional revenues of 1.3% of GDP, or about R$ 172.1 billion. (Given the nominal GDP of R$13.237 trillion projected by the Ministry of Finance).

“In 2024, it will be necessary to implement the fundraising efforts already foreseen in the LOA and integrated in the base scenario, with the aim of imposing sanctions on the relevant legislative measures. In 2025 and 2026, 1% of GDP and 1.3% of GDP will be allocated GDPR, respectively, will be needed [em medidas adicionais, isto é, além da legislação vigente, para incremento das receitas]“I informed the National Treasury.

Given the difficulty of obtaining this additional revenue this year and the coming years, analysts believe that financial goals for the coming years may change. Government officials already acknowledge the need to do so (Read more below in this report).

• To do this, the government simply needs to send a different proposal with different, smaller goals, through the 2025 LDO proposal, which will be sent to the legislature next Monday.
• These new goals must be approved by the National Congress for them to be valid.

“The targets set for 2025 and 2026, which are 0.5% and 1% of primary surplus of GDP, are not possible. We all know that and that is why the Palestinian development program needs to achieve a realistic target for next year,” the chief economist said. and Partner at Warren Investimentos, Felipe Salto.

For him, the government made a mistake, in 2023, when it announced that it would eliminate the primary deficit this year and seek to achieve a surplus in 2025.

“He made a mistake in setting something too bold for the medium term. There was no need for it and it was quite clear that it would not be possible to consolidate such a rapid adjustment without taking tougher measures on the spending side, which should have already been taken.” “At the end of 2022, if so. And maybe not even then. So, 2025 is wrong and needs to be changed.”

However, Felipe Salto emphasized that it is important to “maintain the 2024 commitment.” [manter a atual meta]“Because it is this very short-term pillar that supports the good actions approved last year to restore revenues, maintain expectations and effectively improve revenue collection, as we are seeing in the first quarter.”

In response to reporters' questions last week, Planning and Budget Minister Simon Tippett said: He admitted that “the increase in the Brazilian budget from a revenue perspective is already running out, that is, through measures aimed at increasing revenues.”

Minister Simone Tippett declared, “Going further means raising taxes. What we have done so far is to restore public revenues in Brazil without raising taxes.”

According to her, in addition to cutting expenditures, the government can also choose to change current fiscal targets.

“What I can only say, and what Minister Haddad also told you, is that discussing the 2024 and 2025 target is on the table. Re-discuss,” Planning Minister Simon Tippett said this week. last.

Haddad said on Monday: “We no longer have time to make the necessary calculations to set a possible goal in light of what happened over the past year.”

The potential change in financial targets will be decided this week, at a meeting of the Budget Implementation Board.

The current fiscal targets, set through the 2024 Budget Guidelines Act, expect the gap in public accounts to be closed from this year onwards. It also includes surplus results from 2025 onwards.

Around the central target, there are bands of fluctuation for the primary outcome. Within these ranges, there will be no non-compliance with financial targets. thus:

• For 2024, whose central target is zero, the government's accounts could have a deficit or surplus of up to R$28.75 billion without missing fiscal targets.
• In 2025, whose central target is to achieve a surplus of 0.5% of GDP (about R$62 billion), government accounts can present a positive balance of between R$31 billion and R$93 billion without being violated.
• By 2026, with a central target of 1% of GDP (about R$132 billion), government accounts could show a positive balance of between R$99 billion and R$165 billion without being violated.

According to the Fiscal Framework, the new rule for public accounts, if targets are not met (within scope), government spending in the following year could grow by at most 0.6% in real terms (above inflation). If the targets are met, expenditures could grow by a much larger rate: 2.5% in real terms.

In search of a zero deficit this year, the economic team last year approved a series of measures to increase revenues at the National Conference. see below:

in The survey conducted by the Economic Policy Secretariat at the beginning of March, With participants in financial markets, Government accounts were expected to represent a deficit of R$82.8 billion this year. that it A negative result of R$86.5 billion in 2025.