Authorities makes use of maneuvers and further revenues to hunt surplus in 2022
- July 28, 2022
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Among experts, the result after measures is already classified as ‘artificial’
The Ministry of Economy reduced the projection of deficit in public accounts and considers it possible that the improvement will continue to the point that the year ends with a slight surplus in the primary result (which excludes the interest-bearing account). The first positive balance after eight years, however, is achieved with the help of maneuvers and temporary recipes – without which it would be difficult for the number to come out of the red.
The need to eliminate the deficit in public accounts was expressed in 2018 in the government plan drawn up by then-candidate Jair Bolsonaro (PL) and Minister Paulo Guedes (Economy). The task was compromised above all by the expenses of the pandemic, but it gained strength in the Ministry of Economy in the final stretch of the mandate.
For now, the most recent official projection says that the central government (Treasury, Central Bank and Social Security) will end up with a deficit of R$59.3 billion, 9% below the estimate two months ago. The number would easily pass the maximum gap of R$ 170.4 billion allowed by the Budget Guidelines Law in the year, but the technicians see the possibility of an even better result.
Esteves Colnago, Special Secretary for the Treasury and Budget at the Ministry of Economy, considers it possible to return to the blue in 2022. “We are heading towards reaching the end of the year with a very low deficit, close to zero, or with a surplus. It would be the first fiscal surplus after eight years,” he said in an interview on Monday (25).
“The expectation that is consolidating is that at the end of the year we will have a surplus, albeit small, from the central government”, he added.
The maneuver provided by the constitutional amendment enacted last year that authorized the postponement of payment of precatories (debts to be paid by the State after determining the Justice).
In 2022, the expense with precatories would be BRL 89 billion, but the text allowed creating a limit of BRL 44 billion for obligations – which gave temporary relief, but puts the rest in a queue to be paid in the following years. , which can be reduced with various operations, such as discounts on amounts owed by the Union. The government estimates that it will leave around R$ 20 billion in precatories for next year.
In addition, atypical earnings recorded in 2022 compromise the idea that the accounts are naturally in balance. This year, the government obtained extraordinary revenues from the privatization of Eletrobras (which boosted gains from concessions and permissions by R$ 26.8 billion) and from dividends from BNDES (National Bank for Economic and Social Development), which paid the National Treasury R$ $18.9 billion related to profit recorded in 2020 and 2021.
Now, the government has also asked large state-owned companies to raise and anticipate part of the dividends that would only be paid in 2023. The request is part of an attempt to neutralize this year the effects of the constitutional amendment that released R$ 41.25 billion on the eve of the election and tax waivers resulting from the exemption of fuel.
Colnago reiterated, when asked about extraordinary measures that helped with the fiscal framework, that the government believes that public accounts are on a path to equilibrium.
Daniel Couri, executive director of the IFI (Institução Fiscal Independente, a Senate body that monitors public accounts), says that measures such as the anticipation of dividends do not generate new revenue — they only pull the data that would be computed in 2023 — and that the change in the precatories created a liability not reflected in the fiscal statistics of the primary result.
“Advancing revenue would aim to satisfy a cash flow need, but I don’t think there’s a problem right now for the Treasury that justifies this anticipation. It just seems to me a need to present a better result”, he says. “Advancing revenue is less debt now and more later.”
“If it’s just to show a better result, this result will be artificial. It will be clear to anyone who follows the public accounts that it will be artificial,” she says.
Couri considers that there are structural gains in the government’s accounts and that the improvement in the accounts has not only occurred due to maneuvers or atypical recipes for 2022. The recovery of the labor market, for example, has been expressive and has the potential to remain in the coming years ( which helps with fundraising).
On the other hand, conjunctural factors that have helped federal revenue in 2022 are not guaranteed for the coming years, such as inflation, the value of oil and the possible slowdown in the economy in the second half of the year. In addition, there is potential for the measures taken now to subsidize fuels and boost benefits to continue into 2023.
“There are positive numbers to show, but the risks are there. And the approval of the PEC [que turbinou benefícios] does not contribute to reducing these risks, on the contrary”, he says.
The need to eliminate the deficit in public accounts in the first year of term was expressed in 2018 in the government plan of then candidate Bolsonaro. Guedes tried to achieve the goal with different measures, but he reached the last year of the mandate without achieving the feat and with the task compromised above all by the extraordinary expenses of the pandemic.
István Kasznar, economist and professor at FGV (Fundação Getulio Vargas), argues that discussions on public accounts also take into account interest expenses (which are not included in the primary result).
As shown by Sheetafter the significant drop caused by the end of extraordinary expenses linked to Covid in 2020, government spending including interest grew again and reached 34.14% of GDP (Gross Domestic Product) at the end of the first quarter.
The level exceeds that observed throughout 2018, in the government of Michel Temer (MDB) – showing that the Bolsonaro administration currently registers an expense including interest higher than when he took charge of public accounts.
“I want to know if the income minus expenses are closed with interest and Social Security. They don’t close. The point is that public debt is pushed with the belly”, says Kasznar.