Although they see increasing chances of the band of tolerance given by the president’s government, Luiz Inácio Lula da Silva (PT)political analysts point to a risk to public accounts that goes beyond the rules established by the fiscal framework: the risk imposed by the use of parafiscal policies.
This assessment was captured in the 59th edition of , a survey carried out by InfoMoney with some of the main consultancies and independent political analysts operating in Brazil (learn more about the participants and the methodology adopted at the end of the report).
According to the survey, carried out between the 4th and 8th of November, 59% of the political analysts consulted consider the risks posed by parafiscal measures to balance public accounts to be “high” or “very high”. Another 35% assess such risks as “moderate”, while only 6% consider them “low”.
Continues after advertising
On a scale from 1 (very low) to 5 (very high), the average of the experts’ responses to the risk offered by the quasi-fiscal measures to build a healthy framework for the accounts was 3.71.
Parafiscal policies involve initiatives that use mechanisms outside the current fiscal rules, preventing expenses from passing through the Public Budget and being framed by the spending limit — one of the rules of the new fiscal framework, which establishes a “lock” on the growth of expenses between one financial year and another.
READ ALSO:
Continues after advertising
In the financial market, concerns about these instruments grew after the forwarding of a bill (PL 3,335/2024) that deals with . The project sent to parliament for deliberation says that the “Gas dos Brasileiros” aid will guarantee additional benefits with the granting of discounts on the purchase of cooking gas. This measure would be offered directly at the retail dealer for the purchase of cylinders, limited to one unit per family registered in the Single Registry for Social Programs (CadÚnico).
According to the text, this new modality can be funded through direct transfers to Caixa Econômica Federal in two ways: 1) by the Union, from budget allocations allocated to the Ministry of Mines and Energy, subject to budgetary and financial availability; and 2) by legal entities that sign an agreement with the Union.
The latter, in practice, represents a kind of “matching of accounts” of payments that would be made to the Union, by companies that explore the pre-salt, destined for the so-called Social Fund. What was seen as a “maneuver” by experts in public accounts, who understand that the fiscal framework is circumvented by foregoing collection and sending proceeds to the fund. In this movement, it would be possible to make a subsidy without the burden incurred by the Union being counted as an expense ─ that is, without the risk of disobeying one of the restrictions imposed by the fiscal framework.
Continues after advertising
But the modus operandi is not new. It was also adopted for the “Pé de Meia” program, which creates a fund of up to R$20 billion with resources from surpluses and surpluses from other funds ─ Social Fund (FS), Operations Guarantee Fund (FGO) and Guarantee Fund of Educational Credit Operations (FGEDUC) ─ to encourage students enrolled in public secondary education to stay and complete school.
With such a design, there are no expenses from the National Treasury and the resources coming from the aforementioned funds are not even transferred to the Union’s coffers (which would culminate in recording revenue and subsequent expenses, limited to the rules of the fiscal framework).
The law was sanctioned with this format with signatures from Lula, ministers Fernando Haddad (Finance) and Camilo Santana (Education), Silvio Almeida (then Minister of Human Rights) and Osmar Ribeiro de Almeida Junior (executive secretary of the Ministry of Development and Social Assistance, Family and Fight Against Hunger). The absence of Simone Tebet (Planning and Budgeting), one of the biggest defenders of the program to encourage young people to remain in school, was notable.
Continues after advertising
Also on the list of concerns of economic agents related to quasi-fiscal policies are initiatives involving state-owned companies and the decoupling of financial surpluses from funds — that is, a movement to allow unspent revenue linked to a specific fund or expense to be used for new purposes. .
Leaks in the ceiling
Throughout the year, the Ministry of Finance’s projections for the primary result deteriorated, going from a surplus of R$9 billion in the Annual Budget Law (LOA) sanctioned to a deficit of R$69 billion, as pointed out in the Assessment Report of Primary Revenues and Expenses (RARDP).
Part of the worsening (around R$39 billion) is explained by the resources allocated to combat the climate tragedy of heavy rains in Rio Grande do Sul (RS). But there is also relevant participation from the General Social Security Regime (RGPS) and the Continuous Payment Benefit (BPC), which totaled R$31 billion in the worsening seen.
Continues after advertising
Considering RARDP data, there was a deterioration of R$8 billion just from the third to the fourth two months, but the government’s projections of reaching the lower limit of the year’s primary result target ─ that is, a deficit of 0.25% of the Gross Domestic Product (GDP), or R$28,756, according to the economic team’s own projections.
This is because expenditure outside the calculations for measuring the fiscal target increased by R$12 billion, due to the tragedy in Rio Grande do Sul and the fires worsened by the drought throughout the country in the middle of the year.
How was the research carried out?
O Power Barometer interviewed 17 experts between November 4th and 8th, through the online questionnaire application.
Of this group, 12 represent political risk analysis or government relations consultancies. They are: Agora Political Affairs; BMJ Consultores Associados; Dharma Political Risk & Strategy; Dominium Consulting; Political Strategy Axis; Eurasia Group; MCM/LCA Consultores; Medley Global Advisors; Patri Public Policies & Public Affairs; Prospective Consulting; RGB Consulting; and Seta Solutions Public Affairs.
In addition to them, 5 political analysts participated in the survey independently: Antonio Lavareda (Ipespe); Carlos Melo (Insper); Leonardo Barreto (Think Policy); Rogério Schmitt (Democratic Space); and Thomas Traumann (Traumann Consultoria).
As previously agreed with the invited experts, each person’s responses are kept anonymous, with only the aggregated results being published.
FREE ACCESS
BONDS PORTFOLIO
