This year’s budget still has R$13.3 billion frozen to meet the goal of eliminating the deficit
The government Luiz Inácio Lula da Silva (PT) released R$ 1.7 billion in spending in the 2024 Budget. The announcement was made in the Bimonthly Revenue and Expenditure Assessment Report, released on Friday (20.Sep.2024). Here is the full of the document (PDF – 3 MB).
In the report, the economic team estimates a primary deficit of R$28.3 billion in 2024. The government’s goal established in the fiscal framework is to eliminate the deficit this year, but there is a tolerance range that allows a negative balance of up to R$28.8 billion in the accounts.
The release of R$1.7 billion was possible after the government eliminated the R$3.8 billion contingency due to surprises in government revenues. Federal revenues broke a record – a result above what the government expected.
On the other hand, the government blocked R$2.1 billion in spending, which is higher than projected by the economic team.
CONTINGENCY X BLOCKADE
There are differences between contingency and blocking. Contingency is done when there are revenue frustrations. As the collection has been high and has been a positive surprise, the government has done a de-contingency. In this case, there is a release of R$ 3.8 billion.
The freeze, in turn, is a procedure adopted by the Union when mandatory expenses are above the estimated. Therefore, it is necessary to reduce discretionary, non-mandatory expenses. The economic team froze R$ 2.1 billion.
On balance, the Lula government allowed an increase in expenses in R$ 1.7 billion. The economic team did not detail the volume of resources that each ministry will receive.
Budget blockages are carried out to meet the goals established in the fiscal framework, approved and sanctioned in August 2023. The government still has R$13.3 billion in blocked amounts.
The federal government estimates a primary deficit of R$28.3 billion in 2024. Financial market agents expect a larger negative balance. In September, the median of the estimates indicated deficit of R$66.7 billion in 2024.
MAIN VARIATIONS
Some expenses contributed to the increase in spending freezes:
- social security benefits – increase of R$5.3 billion (amount subject to the spending limit of the new fiscal rule) with update of the estimate for RPV (small value requests) by the Federal Court;
- BPC (Continuous Benefit Payment) – growth of R$0.3 billion. The government states that the amount was partially offset by a reduction of R$0.5 billion in benefit expenses, including savings from reviewing registrations.
The amount was offset in part by these spending reductions:
- Aldir Blanc Law – reduction of R$1.9 billion in disbursements made by the Union to States and municipalities to promote culture;
- personnel and social charges – drop of R$1.0 billion with the update of the estimate for small-value requests by the Federal Court;
- court orders and court orders – a decrease of R$0.9 billion with an update of the estimate by the Court.
The breakdown, by agency, of the block totaling R$13.3 billion will be included in an annex to the Budget and Financial Programming Decree, to be published on September 30. After the publication of the decree, the agencies will have 5 business days to indicate the programs to be blocked.
The blocking of appropriations in compliance with the spending limit may only apply to:
- allocations of Executive Branch bodies classified as RP-2 (general discretionary expenses);
- RP-3 (New PACthe Growth Acceleration Program);
- RP-8 (committee amendments), which will be in the same proportion as the set of discretionary expenses.
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