Finance Minister Fernando Haddad said the economic team seeks the center of the fiscal target. The minister was asked about the warning made by the Federal Court of Audit (TCU), who again pointed out that the adoption of the lower limit of the tolerance interval for the annual primary result, replacing the center of the goal, is incompatible with the Fiscal Responsibility Law.
“The technical area of TCU understood something that is very close to what we Ministry of Finance understands that the law says and very close to what Congress understands that the law says, which is the fact that the budget has to be executed,” said the minister.
He stated that the government tried to introduce a norm by saying that it could seek a better fiscal result, but Congress itself rejected this standard. “I think there needs to be clarification regarding the decision of Congress,” he continued.
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“Regardless of what the norm says, we are looking for the center of the goal, it has no doubt,” he added.
Haddad said he and his team are “very close” than the technical area of the Court of Auditors understands as correct. “I don’t know if TCU is aware of the decision that Congress has made when we try to change toward what TCU is claiming. We try to make this change and Congress has rejected.”
Government did not contain
Earlier this week, when presenting the 4th Quarter Primary Revenue and Primary Expenses Report, the economic team reported that no budget costs of 2025 was made, since the estimated year’s deficit of R $ 30.2 billion is less than the lower limit of the target (R $ 31 billion deficit).
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The understanding presented was that when it is at the limit of the band, it is not possible to adopt additional contingency measures.
Still, the government maintained the blockade – the total spending blocked to meet the growth limit of the tax framework expenditure went from R $ 10.7 billion in the previous report to R $ 12.1 billion in this edition, representing all frozen resources.
The inspection of the Court of Accounts argues that there are risks when aiming at the fiscal target floor in the bimonthly assessment made to verify that the projected income and expenses for the year are in agreement to reach the target.
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Asked if it is confident that this position of TCU will not generate the need for additional adjustment this year, he replied: “I believe we will clarify, even what strategy we are using to look for the best possible result.” He concluded by saying that this is the same strategy used in 2024, when the government met the goal within the lower limit of the band.
Farm and Planning
The Ministries of Finance and Planning and Budget issued a joint note on the warning made by the Federal Court of Audit (TCU), which again pointed out that the adoption of the lower limit of the tolerance interval for the annual primary result, replacing the center of the goal, is incompatible with the Fiscal Responsibility Law (LRF).
The inspection of the Court of Auditors argued that there are risks when aiming at the fiscal target floor in the bimonthly assessment made to verify that the projected revenues and expenses for the year are in agreement to reach the target.
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For the court, there is contradiction to a “preventive spirit”. That is, the contingency of resources needs to be referenced at the center of the goal, according to the conclusion of the Court of Auditors.
Notification
The folders stressed that there was no official notification and said they were unaware of the entire content of the decision of TCU, but said the federal government “reaffirms its commitment to the conduct of fiscal policy based on the service of the primary result goal.”
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“The ministries clarify that contingency is an instrument used, under the terms of the LRF and the sustainable tax regime, when there is a risk of non -compliance with the goal that, according to LC 200/2023, is a band goal and not to the point,” he said. “Thus, the primary goal is breached when the primary result does not achieve the lower limit of the band. It is therefore a compulsory and linked legal mechanism, applied to the budget of all powers,” he continued.
The folders headed by ministers Fernando Haddad and Simone Tebet rescued a proposal made by the Executive Branch at PEC 45 of 2024 (from the spending cut), which allowed the government greater flexibility to budget execution to reinforce compliance with fiscal goals. “It is worth recalling that the National Congress was rejected the constitutional amendment proposed by the Executive Power.”
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Fazenda and MPO also said that over the last years, the government has adopted “various measures” aimed at sustainability of public accounts, such as approval and strengthening the tax framework, revenue management and recovery and the review and qualification of public spending.
Commitment
Finally, according to the ministries, the government’s fiscal commitment is reinforced by the fact that the 2024 primary result was a deficit of R $ 11 billion, “closer to the center of the lower limit allowed by LC 200/23, which was a deficit of R $ 28.8 billion.”
Earlier, shortly before the release of the note, Minister Fernando Haddad argued that a clarification regarding the decision of Congress is made.
“I don’t know if TCU is aware of the decision that Congress has made when we try to change toward what TCU is claiming. We try to make this change and Congress has rejected.” He added that his team members are “very close” than the technical area of the Court of Accounts understands as correct.
The farm holder also said that “regardless of what the norm says, we are seeking the center of the goal.”
Government kept expenses blockade
Currently, the estimated 2025 deficit is R $ 30.2 billion. On the occasion of the 4th Quarter Primary Revenue and Primary Expenses Report, presented last Monday, 22, the government understood that, as the projected deficit is lower than the lower limit of the target (R $ 31 billion deficit), it was not necessary to contingent expenses.
On the other hand, the government maintained the blockade to comply with the growth limit of tax frames, which went from R $ 10.7 billion in the previous report to R $ 12.1 billion in this edition, representing all frozen resources.
