The Federal Court of Auditors (TCU) decided this Wednesday, 3rd, that the Lula government is not obliged to aim for the center of the fiscal target when freezing Budget expenses this year. The decision comes after Congress approved a provision in the Budget Guidelines Law (LDO) that authorizes the government to pursue the fiscal target floor, and not the center, in 2025.
The position of the TCU technical unit is as follows: the LDO is the instrument that establishes parameters for freezing resources in the Budget and, based on this understanding, it is the rule drawn up each year that can define whether the government has the approval to follow the center or the floor of the fiscal target.
The government’s goal this year is to eliminate the public account deficit. In practice, however, the Executive may have a deficit of R$31 billion, which is the target floor (-0.25% of GDP), as the fiscal target provides for a tolerance range up and down.
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On September 24, the Court of Auditors had reached the understanding that the government would need to pursue the center of the primary result target, and no longer the lower limit of the fiscal target range. At the time, the TCU stated that the practice was “incompatible with the Fiscal Responsibility Law”. There was an appeal and the effects of the ruling were suspended.
This Wednesday, the decision was to release the Executive from targeting the center, following a decision by Congress. On the other hand, some of the ministers of the Court of Auditors presented the need to alert the government about the irregular nature of pursuing the minimum level before the legislative change. This was, for example, the position of the minister and vice-president, Jorge de Oliveira.
“We know that Congress changed the law; however, in view of what was analyzed by the TCU, it was sent to the Ministry of Planning and Budget that the adoption of the lower limit of the target proves to be incompatible with the current budget law”, declared Oliveira.
The expectation is that the 2026 LDO, currently being processed in Congress, will also make this permission clear to the government, although the text has not yet been voted on. The understanding reiterated by minister Walton Alencar Rodrigues is that, before the legislative change, the government spent “billions” illegally.
The case’s rapporteur, Minister Benjamin Zymler, in turn, assessed that, regardless of the fiscal target, it is important to look at the trajectory of public debt, while reinforcing other warnings about public accounts.
How the Broadcast (Grupo Estado’s real-time news system) showed earlier that TCU technicians defend overcoming the discussion around meeting the fiscal target based on the center of the primary result range and reinforce other warnings to the federal government.
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Minister says practice reminds Dilma government
The minister and vice-president of the TCU, Jorge de Oliveira, made reference to the government of former president Dilma Rousseff when commenting on the practice adopted by the current government in pursuing the minimum target.
“I remember that, in the previous opinions on the accounts of the president of the republic for 2014 and 2015, the Court recorded similar irregularities. On those occasions, the government used the targets contained in objects of law as a reference for contingency, disregarding the targets actually in force”, said Jorge de Oliveira.
Article 9 of the Fiscal Responsibility Law states that the LDO is responsible for defining the criteria for limiting commitment and financial transactions, in the assessment carried out bimonthly.
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TCU technicians interviewed by the report recognize that the ideal would be for the topic to be addressed in a permanent law and not in a temporary rule, since the LDO is annual.
In any case, according to the argument, the delegation to the LDO is explicit. Still according to the analysis, the technical role is not to assess whether the law is “good or bad”, but rather its faithful compliance.
