Accounts in red: Government records a deficit of R$114.6 billion in January-November 2023, according to the Treasury | Economy

The federal government's accounts registered a primary deficit of R$114.6 billion from January to November 2023, the National Treasury reported on Wednesday (27).

A primary deficit occurs when tax revenues are less than government spending (without considering interest payments on public debt). When revenues exceed expenditures, the result is a primary surplus.

The December result is still missing to get the final value of the deficit recorded in 2023, but National Treasury Minister Rogerio Ceron estimates that this year's deficit should be closer to R$125 billion.

“We have more December to close out the year, and the expected deficit for December will likely be around R$10 billion, which would lead to a cumulative deficit of around R$125 billion in the year, which should stay there, i.e. About 1.2% of GDP,” Ceron said.

Although lower than the budget forecast – which forecasts a gap of up to R$228.1 billion – the value is still higher than the forecast given by Finance Minister Fernando Haddad in January that the negative result would be less than R$100 billion. – About 1% of GDP.

For 2024, the government continues to strive to achieve a zero deficit, that is, a balance between revenues and expenditures.

According to Ceron, the two measures announced by the federal government to increase revenues in 2023 will have a greater impact on revenues in 2024 because they took a long time to take effect this year. are they:

• Re-weighted vote in the Administrative Council for Tax Appeals (CARF), a collective body responsible for ruling on appeals from companies fined by the Federal Revenue Service.

This measure was among the proposals announced by the economic team in January to reduce the estimated gap for 2023. Initially, the government sent an interim measure on the topic to the National Congress, but it was not analyzed due to a lack of agreement.

The executive then sent a draft law to the legislature – which was approved by parliamentarians and passed by the executive in September.

“Another problem that did not generate revenue in 2023, as initially planned, is Carf, we initially launched it. [medida provisória] “In order to reformulate CARF and be able to speed up trials again, there was a heated debate in Congress (…) We lost a large part of this practice,” Cerone explained.

• Change in the rules for deduction of benefits granted via ICMS (state tax) from the federal tax calculation base. This procedure became known as “ICMS MP Support”.

He added: “We faced this debate. Representative Resolution 1185 was not resolved until now, at the end of the year (…) It ended up not having any impact on the year 2023, but was directed to the year 2024.”

The Treasury Secretary also explained that lower inflation throughout this year also impacted federal revenue estimates.

“The very effect of the disinflation process, the convergence of inflation downward, was very positive for the country. It allowed this year to be very good, but it eliminated the nominal revenue base, depriving about R$25. billion raised.”

Account status in November

Looking at November alone, the government's accounts recorded a primary deficit (when expenditures exceed revenues) of R$39.4 billion.

According to National Treasury, this was the second-worst result for November, taking into account the historical inflation-adjusted series that began in 1997.