Two of 9 economic measures announced by Haddad provide for cost cuts

Only two of the measures in the fiscal recovery plan announced by Haddad on Thursday (12) provide for cutting expenses. The group of actions to be taken by the federal government aims to improve the country’s fiscal situation, reducing the gap in public accounts.

The Ministry of Finance announced that it intends to reduce the public accounts deficit from the 2.3% currently forecast for 2023 to less than 1% of GDP. Among them, a tax refinancing program called “Litígio Zero”.

Most of the economic measures are aimed at increasing revenue, such as the return of federal taxes on gasoline, but only two are aimed at cutting government spending.

The two expenditure reduction actions are: the permanent effect of the revision of contracts and programs and the authorization for execution lower than that authorized in LOA 2023. Each of them would have an impact of BRL 25 billion on the 2023 GDP, which would represent 0, 47% of the indicator.

See the package of measures announced by Haddad:

Review of contracts and programs

According to Haddad’s package, the two expenditure-cutting measures will have an impact of BRL 50 billion on public accounts. The first of them refers to a review of contracts and programs made in the previous administration, in which R$ 25 billion would be saved.

According to Murilo Viana, specialist in public accounts, it was not very clear which contracts would be reassessed to cut costs.

“This is a very high value to talk about program review, in addition to something quite generic. The ministries were quite blocked in the previous government due to lack of resources, so many programs have already been reviewed”, he highlighted.

The specialist stated that a possibility of revision would be in Bolsa Família.

“There may be an improvement in the efficiency of the program, which has historically been a successful program and very well studied internationally, but which lost too much efficiency during the Bolsonaro administration”, he pointed out.

“There was an expansion beyond the account with Auxílio Brasil and a difficulty in identifying registration due to the distance from Covid, and this affected CadÚnico and the evaluation of the distributed benefit”, he added.

Execution authorization lower than authorized in LOA 2023

The second measure announced by Haddad predicts that the government will not spend R$ 25 billion of the amount authorized to spend by the Annual Budget Law (LOA) of 2023. That is, there will be a cut in expenses that was foreseen and expected before by the Treasury.

“The Budget Law authorizes expenditures and approved an expenditure expenditure, but after the increase in space with the PEC of the Explosion, what Haddad said is that it will not be necessary to spend up to R$ 25 billion”, he explained.

Collection

As for the collection, one of Haddad’s measures is the return of ICMS to the calculation base, a partial reencumbrance of fuels starting in March. The minister pointed out that the government’s decision on the exemption of PIS/COFINS on fuels will only be taken after Jean Paul Prates takes over the presidency of Petrobras.

It is worth mentioning that, on the day he took office, Lula edited a provisional measure (MP) that extended for 60 days the tax exemption on gasoline and diesel until the end of the year, leading to a loss of revenue for the Union.

The action plan includes a review already carried out by the National Treasury of the accounts forecast for 2023, which raised the revenue projection for the year by BRL 36.40 billion, equivalent to 0.34% of GDP.

According to Haddad, with this figure, added to the values ​​of PIS/Pasep assets, which add another R$ 23 billion, “we are already talking about practically R$ 60 billion [a mais] of primary income, without anything having to be done”.

Reviewing contracts from the previous management is also a strategy that should be followed by the new government, in addition to giving carte blanche to the ministries to reassess and, if necessary, calibrate social programs.

“There will be a possible renegotiation of contracts and a reassessment of public policies in the federal government”, said the Minister of Planning, Simone Tebet.

“All ministries should assess needs. It does not mean that they will cancel or cancel [os programas], but rather analyze each case. And they will be free to say whether they are going to keep, re-evaluate or cancel the program,” she added.