Members of the government of Luiz Inácio Lula da Silva (PT) signaled to the financial market that the adjustment measures must include an authorization to cancel up to R$12.8 billion in expenses in the 2027 Budget to meet the fiscal target.
The measure would be complementary to the instruments already used by the economic team to reach the target in the event of revenue frustration, such as the temporary freezing of funds through the so-called contingency.
The government's adjustment plan has been discussed in recent days with representatives of the financial market and also the National Congress. This Monday (9), ministers Dario Durigan (Finance) and Bruno Moretti (Planning) met with the president of the Senate, Davi Alcolumbre (União Brasil-AP), to discuss the details.
At the time, the economic team agreed with an adjustment of between R$70 billion and R$80 billion, considering not only the cancellation of expenses, but also other measures.
The trigger will be activated if government revenue is lower than expected, so that the projected result for public accounts for the year is worse than the fiscal target floor. Next year, reaching the central target means delivering an effective surplus of at least R$8.5 billion, but the tolerance margin is R$36.6 billion — that is, the floor is a deficit of R$28.1 billion.
According to interlocutors interviewed by Folha under reserve, if the projected result falls below this level, the government's plan is to allow an extra cancellation in an equivalent amount to slow down real expenditure growth to 2%. It is a percentage lower than the fiscal framework limit, which is 2.5% above inflation.
In the 2027 Budget, this difference of 0.5 percentage points represents R$12.8 billion, according to calculations cited by these interlocutors.
According to reports, the cancellation would even affect the basis for calculating the spending limit for the following years. This means that, even if the limit continues to grow up to 2.5% above inflation in the following years, this expansion would take place on a smaller base, generating a permanent economy.
The government's intention to foresee a permanent reduction in the spending limit when there is frustration in expected revenues was anticipated by Folha last week. At the time, a member of the economic team reported that the objective was to have funding freezes that generate more lasting consequences for the spending trajectory.
The cancellation path is an alternative to simply reducing the framework's expansion limit from 2.5% to 2%. This measure did not move forward because it would also have an effect on the correction of the minimum wage, something that President Lula ruled out in conversations with his team.
According to government and market interlocutors, the plan includes the search for the center of the goal – that is, an extra effort to improve the results of the accounts – and an authorization to contingency not only discretionary expenses (such as funding and investments), but also mandatory ones, which are currently immune to this type of instrument.
According to a technician, the idea would be to allow the government to limit mandatory expenses, but without affecting the obligation itself — that is, what has already been contracted will be fulfilled.
The government will also make permanent the rule that removes revenue from the sale of Union oil from the RCL (net current revenue) calculation. This rule would already be activated next year, thanks to a law approved in August this year, but would lose its effects when the government returned to running a surplus.
As the indicator is the reference basis for calculating the Health floor (15% of the RCL), the measure reduces the obligation to spend in this area by at least R$6 billion next year.
The news signaled by the economic team in recent days is that this amount will also leave the framework's spending limit permanently. Other more volatile extraordinary revenues may also come out of the RCL account, such as the Oil Export Tax.
Another measure provides that, in the event of a result below the target floor, in addition to the extra cancellation of expenses, the government may limit tax compensation to a similar amount. The measure would have the potential to increase revenue and expand the effort to balance the accounts.
The measures must be included in a PLP (complementary bill), which will be presented by a senator allied with the Lula government. The government leader in Congress, senator Randolfe Rodrigues (PT-AP), stated this Tuesday that the presentation of the text and the rapporteur will be the responsibility of senators Eduardo Braga (MDB-AM) and Jaques Wagner (PT-BA), but it is still open who will assume each specific role.
For the government, it is natural that Braga is at the forefront of the text, since he is also the rapporteur of the PLOA (Annual Budget Bill) for 2027, said Randolfe.
In recent days, different members of the Ministry of Finance and the Ministry of Planning met with financial market interlocutors to talk about the measures and also listen to the agents' perception of what is being discussed.
The biggest challenge for the economic team at this moment is to be able to develop a plan that is, at the same time, credible for the market and palatable for the head of the Executive. As Folha showed, after the mobilization of the population in the streets, which gave the PT member an unprecedented turn in the second round of elections, Lula resisted measures that could constitute electoral fraud.
Therefore, the economic team is trying to portray adjustments in public accounts as something necessary to maintain the sustainability of social policies, an issue dear to the president. The expectation is that the final design of a reformulation will contain measures with impacts beyond the 2027 Budget, sent in August this year, but possibly without finalizing the necessary adjustment. This task will continue to be the responsibility of any new team in the Lula 4 government.
