The Secretary of the National Treasury, Mansueto Almeida, reported today (30) that the deficit in public accounts could exceed R$350 billion this year. In an interview to present the fiscal result for February, Mansueto stated that this year “will be quite atypical”, due to the measures to combat covid-19.
“There will be very strong pressure on expenditure and revenue in the months of April, May and June,” he said in an interview broadcast online.
Mansueto mentioned government programs to face the crisis with an impact on public accounts, such as extra unemployment insurance, credit for small and medium-sized companies with a subsidy from the National Treasury, payment of R$$ 600 for informal workers, postponement of payment of the federal part of Simples Nacional, advance of social security benefits (13th salary) and salary bonus.
Informal workers
Mansueto stated that data from the social assistance network, public programs, the National Social Security Institute (INSS), the single registry, etc. will be used to pay informal workers.
Regarding the amount, Mansueto said that R$600 per worker is not a small amount and highlighted that it is an emergency program. “We are in a country where 50% of people with formal employment contracts earn less than two minimum wages per month,” he said.
THE secretary He said that the possibility of further reducing federal taxes must be analyzed very carefully. “Any measure to increase expenses or reduce revenue increases the fiscal gap,” he recalled.
Increased expenses
The secretary stressed that there should be no permanent increase in expenses once the crisis is over. “It is essential to have control so that temporary expenses do not become permanent. If that were to happen, we would put the entire fiscal adjustment process at risk. That is why it is very important that all actions with economic and social effects are limited to 2020,” he said.
Mansueto said that economic activity was recovering before the crisis hit Brazil, and that the government was making adjustments to the economy. “It’s a good thing that we are going through such difficult circumstances after having approved the pension reform, after having made several structural adjustments to the economy, including a scenario of very low inflation and very low interest rates.”
He also stated that Brazil has a structural problem, which is spending practically everything it collects since 2015 to pay mandatory expenses. “That is why it is so important for us to focus on a structural fiscal adjustment, to control the growth of mandatory expenses. The first big step was taken with the approval of the pension reform, but there is still much more to be done. But at least this is the first year in four years that we have not had all the public exams scheduled. There was a halt for the government to reorganize itself and there has been no increase in public employees’ salaries,” he said.
War budget deficit
Mansueto defended the proposed amendment to the Constitution (PEC) that creates a budget separate from the government's fiscal budget to deal with the novel coronavirus pandemic. According to him, the approval of this measure is important so that the political decision to face the crisis is not impeded by fiscal rules. “That is why this good dialogue with the National Congress is so important for the approval of this PEC on the war effort, which will regulate this entire part of public finances in times of public calamity,” said Mansueto.
February result
Although the government's primary deficit in February, expenses (excluding interest expenses) were greater than revenues, reached R$25.857 billion. According to Mansueto, the result was impacted by the increase in transfers from the Union to states and municipalities. "There was an increase in transfers to states and municipalities due to the increase in revenue in January," he said. However, these transfers reached R$33.397 billion, with a real increase (discounting inflation) of R$9.61 billion.
In the first two months of 2020, there was a primary surplus of R$18.275 billion compared to a surplus of R$11.799 billion in 2019.
Although the primary result of the Central Government (National Treasury, Social Security and Central Bank) accumulated in 12 months until February 2020 was a deficit of R$1.5 billion, equivalent to R$1.211 billion of the Gross Domestic Product (GDP), the sum of all goods and services produced in the country. Therefore, the primary result target of the Central Government for 2020 was a deficit of R$1.24 billion, equivalent to R$1.641 billion of the GDP. However, due to the expenses to face the covid-19 pandemic, the public calamity decree exempted the government from complying with the fiscal results.