With lower inflation, the government may be forced to freeze R$ 4,4 billion in the 2024 budget to guarantee a zero deficit.
According to the Ministry of Planning, inflation of 4,62% in 2023 will result in an adjustment of R$ 28 billion, an amount lower than initially projected: R$ 32,4 billion.
247 - The decrease in the inflation rate in 2023, which closed the year at 4,62%, below the ceiling of the target set by the Central Bank (BC), will have significant impacts on the spending limit of the Executive Branch for the year 2024. According to the Ministry of Planning and Budget, this will result in an adjustment of R$ 28 billion, about R$ 4,4 billion below the amount initially foreseen in the budget proposal for the current year, which was R$ 32,4 billion.
The explanation for this reduction lies in the rules of the fiscal framework, established the previous year. According to the legislation, the limit for government spending in 2024 is adjusted for the accumulated inflation over the 12 months up to June of the previous year, which totaled 3,16%. Therefore, the government may increase this limit through a supplementary law at the beginning of 2024, should the inflation of the previous year be higher than that recorded in the 12 months up to June. >>> Brazil ends 2023 with inflation of 4,62%, below the Central Bank's target.
To calculate the effective spending limit for 2024 and prevent ministries from having fewer resources allocated in the proposed budget, the government projected inflation for 2023 at 4,85%, which resulted in an increase in the spending limit for the current year, specifically by R$ 32,4 billion in "conditional expenses". However, with the recently released IPCA index, which came in at 4,62%, the spending limit will be lower, totaling R$ 28 billion. >>> Lula says he will make changes to government program announcements and predicts: "the economy will grow more than they are saying."
The difference of R$ 4,4 billion may require action from the government, such as a possible budget freeze. The decision regarding this freeze will only be made in March of this year, during the presentation of the revenue and expenditure report for the first two months of the year. >>> Food consumed at home registered deflation in 2023, after three years of increases.
According to data released by the Brazilian Institute of Geography and Statistics (IBGE) this Thursday (11), accumulated inflation in 2023 was 4,62%, remaining within the target range defined by the National Monetary Council (CMN). This was the first time the target was met since 2020.