posted on 07/29/2022 05:56 / updated on 07/29/2022 06:26
The economic team celebrated the record primary surplus (savings for the payment of public debt) of R$ 14.4 billion in central government accounts in June, according to data released yesterday by the National Treasury. The result reversed the negative balance of the same period in 2021, of R$73.5 billion, and exceeded market estimates of a primary deficit of R$39.4 billion. Treasury Secretary Paulo Valle called the result “historic”.
The fiscal result for June was the best, in nominal terms (without discounting inflation), of the Treasury’s historical series, but the seventh, in real terms (in values adjusted for inflation). However, experts warn that the positive data is a point outside the curve and, in large part, the result of the increase in extraordinary revenues, that is, non-recurring, which are not repeated every year. Therefore, there is no guarantee that the expenses, which continue to grow – mainly, the electoral measures created with the PEC Kamikaze, which will hardly be canceled in 2023 – will actually be covered. For analysts, it is not possible to talk about fiscal consolidation.
“The photography looks good, but the film is bad and shows a spending trajectory that will not be resolved with an out-of-curve point. The government tries to show better data, but the fundamentals get worse and are not being shown. Transparency has been decreasing and , to face the increase in expenses, they are even anticipating the transfer of dividends from state companies”, warned the specialist in public accounts Karina Bugarin, a researcher at the Public Policy Laboratory and the Center for Regional and Urban Economics at the University of São Paulo (USP) .
The central government accounts include the Treasury, Central Bank and Social Security. Paulo Valle recalled that the Treasury and Central Bank had surpluses of R$ 56.8 billion and the Social Security presented a primary deficit of R$ 42.4 billion. The primary result is the difference between net income and expenditure, without considering the interest account of the public debt.
Last month, net revenue grew 53.9%, in real terms, to R$190.5 billion. Two items that most contributed to this increase are not managed by the Tax Authorities. Concessions and dividends registered jumps of 9,659.7% and 6,804.4%, respectively, and together they were responsible for R$ 52.3 billion of the increase in revenue — 3.6 times the value of the primary surplus last month.
Meanwhile, expenses shrank 14.5% between June 2021 and 2022, to BRL 176.1 billion. The drop, of R$ 29.9 billion, is largely the result of the delay in payments of precatories related to social security benefits for civil servants, according to Valle. According to Treasury data, this expense fell by R$10 billion, compared to the same period in 2021, to R$2.1 billion. Personnel expenses fell by R$9.9 billion. Disbursements with court judgments and precatories shrank by R$11.2 billion.
“It has a lot of atypical revenue”, highlighted the specialist in public accounts Juliana Damasceno, from Tendências Consultoria. She recalled that fiscal risks are increasing and reinforced that part of the positive result is due to extraordinary revenues, a collection that has been growing thanks to price increases, and the freezing of civil servants’ salaries, which caused personnel expenses to shrink by 28%. in June. “It is clearly unsustainable a fiscal balance that depends on a wage freeze and inflation tax or (not small) demand stimulus”, she stressed.
“Even without readjustments, the government spends more than the ceiling limit and expenses under this constitutional rule grew 16.4% in the first half of 2022”, added the Tendências analyst. She also recalled that the government has already had to block BRL 13 billion from this year’s Budget, not counting the BRL 41.2 billion in benefits recently approved outside the cap rule. “Therefore, there is no structural adjustment, but the conjuncture helps. The illusion is great. Whoever falls, falls”, she stressed, referring to the PEC Kamikaze.
During the presentation of the data, Paulo Valle confirmed that the government requested the anticipation of dividends from four state-owned companies. He denied that the measure is a new kind of fiscal pedaling. “It is common market practice and does not compromise the 2023 result,” he said.
“The anticipation of state dividends seems like a political move to claim that the current government has achieved what we haven’t had for more than 10 years — a significant primary surplus. But this is a way of masking a dark future”, contested Karina Bugarin, from the USP. “Brazil’s fiscal problem is a matter of flow, not of stock. So, it may be that the government closes the year with good numbers, but that will not stop the trend of expanding spending”, she summarized.