June 24, 2024

The fiscal framework will have a mechanism for reviewing the initial outcome target with conditions

2 min read
The fiscal framework will have a mechanism for reviewing the initial outcome target with conditions
new law

According to Rogerio Cerrone, the national treasury secretary, any change depends on congressional approval

Marco Mortari




National Treasury Secretary Rogerio Cerrone at a press conference (Photo: Washington Costa/MF)

The New Fiscal Framework Supplementary Bill would have a device allowing the government to change the initial results targets set for four years of its administration depending on circumstances issues.

to InfomoneyThe Minister of the National Treasury, Ruggero CerrĂ³n, stated that the new framework would set conditions for any change to occur and that legislative approval would be necessary.

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[A regra] It indicates what the government course will be looking for, in the first year. But it might be appropriate depending on what’s going on. Siron said.

By law, the elected government will need to set primary outcome targets, right at the beginning of the mandate, for four years of practice. Specific targets have a tolerance of 0.25 percentage points up or down.

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If the limit is exceeded, part of the surplus can be used as a “bonus” for public investment – limited to about a third of the R$71 billion projected for these expenditures in the 2023 budget (that’s about R$24 billion).

If the result is below the lower range, public spending can only grow by 50% – and no more than 70% – of how revenues developed in the previous year, while respecting a minimum of 0.6% real growth.

The government of President Luiz Inacio Lula da Silva (PT) has created a deficit commitment of 0.5% of GDP in 2023, the balance the following year and a surplus of 0.5% and 1% in 2025 and 2026, respectively.

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According to Ceron, the specific targets for the primary outcome should be included in the Budget Guidance Act (LDO), a draft of which must be sent each year to the National Congress by April 15.

The minister argues that pre-definition of four-year primary results targets gives predictability to economic agents and assists the government in medium-term fiscal planning.

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