After ending last year with an estimated deficit of R$38.2 billion, the government’s accounts should close 2022 in the negative with a primary deficit of R$106.2 billion in 2022. Both projections are included in the Fiscal Monitoring Report of January, published this Wednesday (19), by the Independent Fiscal Institution (IFI) of the Senate.
The body points out that the approval of the PEC of the Precatórios opened space for more spending, leading to a worsening of the situation of public accounts in a year in which the cooling of activity should also impact revenues.
“Essentially, the worsening in the primary result forecast for 2022 stems from the increase in expenditures made possible by the enactment of Constitutional Amendments No. of precatories, and the reduction in the rate of growth of primary revenues as a result of the slowdown in economic activity and the relative worsening in the terms of trade compared to 2021″, highlights the document.
The IFI recalls that the 2022 Budget was approved with a forecast of a primary deficit of BRL 79.4 billion (that is, expenses will exceed revenues by this amount, without taking into account debt interest expenses).
“The Budget was born with pressure for adjustments”, assesses the report. “In the Executive, there is an excess of expenses in relation to the spending ceiling in the amount of R$ 1.8 billion, which will only be corrected in 2023. In the other branches, expenses did not follow the increase in limits and should undergo readjustments throughout the year. In addition, part of the requests sent by the Executive to the Rapporteur-General for the Budget were not met, which should also generate an increase in expenditures planned for 2022”, the text details.
The agency also warns of the risk associated with the creation or expansion of new permanent expenses, such as the readjustment to civil servants – amid the widespread movement of dissatisfaction on the part of federal servants.
The public sector’s nominal result should also worsen in 2022, mainly due to the increase in interest expenses resulting from the Selic high cycle and the higher premiums requested by buyers of Treasury bonds.
“Everything indicates that interest expenses, as a proportion of GDP (Gross Domestic Product), will continue to rise in the coming months, and may even reverse the current favorable trajectory of reduction of the nominal deficit of the public sector”, completes the institution.
The IFI also highlights that the activity data in the last quarter of last year reinforce a scenario of lower GDP growth for 2022. “Despite the advance of vaccination, the recent increase in cases of covid-19 caused by the Ômicron variant generates additional uncertainties in in relation to the performance of this year’s GDP”, recalls the institution.
Despite the projections for the IPCA this year continue to be slightly above the target ceiling (of 5%), the IFI considers that the significant increase in the real interest rate, the decrease in energy prices and the partial reversal of commodity prices are factors that should contribute to the disinflation process throughout 2022.
Reference: CNN Brasil