Project sent to Congress forecasts a surplus of BRL 61.6 billion in 2025 and BRL 130.8 billion in 2026
The 2024 LDO (Budget Guidelines Law) project, which establishes rules and parameters for the following year’s Budget, reserves R$ 172 billion above the spending ceiling. The money, however, is conditioned to the approval of the new fiscal rule, called the fiscal framework. The text of the LDO was sent on Friday (14.Apr.2023) to the National Congress.
“This authorization [dos recursos acima do teto] vwill facilitate the recomposition and execution of priority public policies for the country, the functioning of the machine and the Union’s investment”, informed the Ministry of Planning and Budget in note.
Expenditures above the current spending ceiling add up to BRL 188 billion in 2025 and BRL 188.5 billion in 2026. Although the text has been adapted to the new fiscal framework, the current version sent to Congress must comply with the current ceiling, with an annex with the parameters and expenses foreseen within the future fiscal framework.
the minister Simone Tebet (Planning and Budget) said that the supplementary bill of the new fiscal rule must be sent on Monday (17.Apr) to the Congress. According to her, the ministries of Planning and the Farm will take advantage of the weekend to make final adjustments to the text.
Read more about LDO:
FISCAL TARGETS
The project brought the targets for public accounts according to the new fiscal framework. The primary result forecast for 2024 is at 0 (neither deficit nor surplus). The text estimates a primary surplus of BRL 61.61 billion in 2025 and BRL 130.83 billion in 2026.
These targets will have a band of 0.25% of GDP (Gross Domestic Product) up or down. With the intervals, there will be a tolerance margin of R$ 28.756 billion for 2024. As the bill only refers to the next year, there are no tolerance values for the target for 2025 and 2026. The primary result represents the deficit or surplus in government accounts without interest on the public debt.
The fiscal framework will combine primary result targets with a cap on real growth (above inflation) of public spending between 0.6% and 2.5% per year. Within this band, expansion will be capped at 70% above-inflation growth in net income over the previous 12 months.
If the framework is not approved and in effect by August 31, the 2024 Budget project may contain expenses outside the ceiling. These expenses, however, would be frozen, without being executed until the new rules have been approved and entered into force.
“Such expenditures could not be executed and would not be considered for purposes of demonstrating compatibility with the current expenditure target and ceiling.”, informed the Ministry of Planning in a message sent to Congress along with the project.
ELECTION FUND
The 2024 LDO project proposes that the FEFC (Special Campaign Financing Fund) have as a maximum value the amount authorized for the 2022 elections. Last year, according to the TSE (Superior Electoral Court), the fund had R$ 4,961 billion available.
With information from Brazil Agency.
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