03/07/2024 – 21:44
Finance Minister Fernando Haddad made a statement on Wednesday night, the 3rd, to reiterate the government’s commitment to the fiscal framework and targets and to announce that R$25.9 billion in mandatory expenses have already been identified that could be cut from the 2025 Budget. The announcement was made in light of the government’s strategy of changing its communication to contain the rise of the dollar and stem the bad mood of the market, which is suspicious of the power of the measures to adjust public accounts.
The details of this reduction will only be made after the ministries involved are notified and there is an expectation that this movement will be reflected in this year’s budget execution, depending on the need for adjustment indicated by the next bimonthly revenue and expenditure assessment report, which will be released on July 22.
“We have already identified, and the president has authorized us to move forward, R$25.9 billion in mandatory expenses that will be cut after the affected ministries are notified of the limit that will be set for the preparation of the 2025 budget. This is not an arbitrary number. It is a number that was drawn up line by line from the budget of what is not in line with the spirit of the social programs that were created,” said Haddad after leaving a meeting of the Budget Execution Board (JEO) at the Planalto Palace, attended by President Luiz Inácio Lula da Silva.
The minister reiterated that this amount is the result of the thorough examination of social programs and other expenses that has been carried out in recent months, with emphasis on the last 90 days, led by the Ministry of Planning. The amount had already been anticipated by Broadcast.
“We will now bring together the ministers involved, who are aware that the technical work was done by the teams themselves, so that there is also no communication failure,” said the minister.
Our commitment to comply with the framework
Haddad reiterated the government’s commitment to complying with the fiscal framework until the end of Lula’s term. He also announced that the government has already identified R$25.9 billion in mandatory expenses that could be cut from the 2025 budget.
“The president has determined that the fiscal framework must be complied with. There is no discussion on this matter,” said the minister after a meeting of the Budget Execution Board (JEO), noting that the approved law had the support of the government and all ministers. “The complementary law was approved, and it is also in conjunction with the Fiscal Responsibility Law. These are laws that regulate Brazil’s public finances and they will be complied with in 2024, 2025, 2026. We are committed to compliance,” he reiterated.
This was Haddad’s third meeting with Lula on Wednesday – the two had their first meeting in the morning at the Palácio da Alvorada, and the JEO had already held a previous meeting at Planalto, between the announcements of the Safra Plan. According to Haddad, the measures discussed by the board combine elements to comply with both the 2024 framework and to guarantee a balanced budget for 2025.
Haddad stressed that the fiscal framework will be preserved at all costs. The statements come in the wake of the government’s new communication strategy, which aims to contain the rise of the dollar and stem the bad mood of the market, which is suspicious of the power of fiscal adjustment measures.
“The framework will be preserved at all costs, which means that in the report that will be presented on July 22, and the IRS is finishing compiling the semester, it may mean some contingency and some blocking, which will be enough for the framework to be complied with,” he said.
According to the minister, the order of magnitude of the contingency, due to possible revenue shortfall, and the freezing, due to the increase in expenses, has not yet been defined. As Broadcast (Grupo Estado’s real-time news system) has already shown, the amounts to be frozen are still under evaluation.
The size of the fiscal adjustment required to comply with the framework this year could anticipate the effects of spending cuts that will occur next year. Haddad said that the Minister of Planning, Simone Tebet, will consider the amounts agreed upon at this meeting for the 2025 Budget. “Some measures can be anticipated for this year, regardless of other items that may be enhanced and other obstacles that may be imposed to comply with the framework,” he said.
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