Luiz Inácio Lula da Silva's government (PT) expects to end the first year of its mandate with a shortfall of R$ 177.4 billion [$ 36 billion] in accounts, a deterioration compared to the previous estimate and even further from the goal set by Minister Fernando Haddad (Finance) to deliver a deficit of up to 1% of GDP (Gross Domestic Product) in 2023.
In September, the government expected a deficit of R$ 141.4 billion [$ 29 billion] in the central government's accounts (which includes the National Treasury, INSS, and Central Bank), equivalent to 1.3% of GDP. The new projection indicates a shortfall of 1.7% of GDP, according to data released on Wednesday (22).
As Folha reported, for the official assessment of goal compliance, the fiscal result will have an additional worsening of R$ 26 billion [$ 5.3 billion], related to the rescue of "abandoned" funds in the PIS/Pasep Fund accounts. In practice, the official deficit would reach R$ 203.4 billion [$ 41 billion] (1.9% of GDP). The LDO (Budgetary Guidelines Law) authorizes a deficit of up to R$ 213.6 billion, which corresponds to 2% of GDP. Therefore, the numbers do not indicate a formal breach of the rule.