The Minister of Planning, Simone Tebet, made her big debut in the Lula III government on Monday (17). Author of the 2024 Budgetary Guidelines Law (LDO), she had already sent the text to Congress on Friday (14th), and presented her expectations for Brazil to the public. If all goes well (read Framework approved), the ministries would have R$ 196.4 billion to use outside of mandatory expenses, almost eight times what would be left with the Ceiling (R$ 24.6 billion). All great in planning, but still far from practice. In order to achieve the premises of the LDO — inflation of 3.5% in 2024, GDP growth of 2.3% and zeroing in the primary result next year — the new fiscal rule should already be approved, and the tax rule at the mouth of the goal.
And neither is where it should be. This means an economic lethargy that begins to invade the second quarter and lights up warning signs on all sides. This sluggishness was evident in the latest Economic Activity Index (IBC-Br) of the Central Bank, considered the preview of the GDP. In January, the indicator retreated 0.04% in relation to December (the market had projected an increase of 0.21%).
In practice, this means that there is less available private capital than expected and the government still cannot, at the risk of committing a crime of responsibility, help. “The resources presented by Simone are based on optimistic indicators and are based on resources that only exist virtually”, said Raul Monteiro da Costa, former advisor to the Central Bank and special secretary for Management and Budget at the Ministry of Planning in the Michel Temer government. Simone herself, during the presentation of the proposal, stated that without approval of the Fiscal Framework it would be impossible to sustain even the mandatory expenses. “It is necessary to create a new framework, with new guidelines that are consistent with the reality of Brazil”, said the minister. According to her, the LDO presents, in a didactic and transparent way, the path necessary for Brazil to advance economically and be more socially just.
TAX REFORM Another point of attention in the LDO is the issue of tax incentives (subsidies, exemptions and tax benefits). According to the text presented, next year R$ 486.1 billion will be allocated for this purpose. The value, however, is very high and incompatible with the Planning perspective of increasing the collection by 8% (a value that is already overestimated because the historical growth average in Brazil is 4.4%). The solution, then, would be the approval of the Tax Reform. According to the coordinator of the Working Group on the subject, Reginaldo Lopes (PT-MG), with the unification of taxes it would be possible to reduce subsidies from R$ 486.1 billion to R$ 178.7 billion in 2024.
In the 2024 LDO, the waiver related to Cofins is BRL 116.3 billion, the largest of all. Next comes agriculture (R$ 57 billion). Simples Nacional and Zona Franca de Manaus (with R$ 36.2 billion and R$ 35.2 billion) should be the only subsidies maintained in full. Constitutional Amendment 109, already in force, provides for the reduction of tax incentives to 2% of GDP. Under the current LDO, however, the waiver violates the law and should reach 4.23% of GDP. It only stays within the legal framework with the Fiscal Framework approved as it is.
PARTICIPATION & TECHNOLOGY To try to bring spending closer to civil society, Simone Tebet wants to institute the Participatory Budget, a practice that crosses PT governments in cities and states, but never engaged in the federal government. The Participatory Pluriannual Plan (PPA Participativo) involves consulting the population and specific sectors to choose demands. According to advisors to the minister, on Thursday (20), President Lula should receive the initial design of the project. If it gets off the ground, the minister will gain a prominent position within the government summit.
Countries such as Germany, Australia, Canada, England and New Zealand have similar processes. According to Michael J. Piore, professor of Economic Policy and Public Budget at the Massachusetts Institute of Technology (MIT), to a greater or lesser extent, governments have understood that it is impossible to have only the political class as a compass. “It is necessary to listen to the population, scientists, educators and the entire organized civil society”, he said. “And with new technologies this is not only possible, it is highly feasible.” He does not rule out, for example, the use of algorithms to map problems common to a larger number of people. The opinion is shared by Pedro Marin, coordinator of the Planning and Public Budget Program of the Tide Setúbal Foundation. For him, the way Brazil organizes public spending is not as effective. “Who looks at this expense? Who assesses feasibility? I do not doubt that the deputy knows about his region, but it is also necessary to analyze it more from the perspective of management and return.” Premises from those who know that pondering, measuring and planning (even if unforeseen circumstances arise) is the least tortuous way to reach the final destination.
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