Fried squid Haddad to save PT in the 2024 elections

Declaration about not pursuing a zero target for deficit is to ensure funds for works next year and help PT members to elect more mayors and councilors

The president’s statement Luiz Inácio Lula da Silva (PT), on Friday (27.Oct.2023), that the government difficultly” will meet the target of zero fiscal deficit in 2024 “got real” from the pragmatic policy of the Chief Executive to the Minister of Finance, Fernando Haddad.

Lula made it clear that he will not risk his popularity in an election year to restrict resources for works and investments just to maintain a result that, from the beginning, does not appear to be feasible. The PT leans on the PT member’s return to Planalto to recover from result 2020 electoral campaign in cities, the worst in municipal elections since 2000.

When reevaluating the target of his economic team, Lula gave the command for Congress to change the zero target, stipulated by the government in the LDO project (Budget Guidelines Law). Haddad was the main defender of the measure, even though he was confronted several times, even by allies, about its unenforceability.

In an interview with Poder360 on August 28, deputy Lindbergh Farias (PT-RJ), for example, already advocated that the target be reviewed by the economic team.

To meet the current projection, the government would have to contingency 25% of discretionary expenses before being able to activate other triggers provided for in the legislation. The value could reach R$53 billion.

On Friday (Oct 27), the government recorded a leak of R$92.6 billion in public accounts from January to September 2023, in values ​​adjusted for inflation. The result is the worst since 2020, when there was a deficit of R$850.2 billion when following the same criteria.

Next year, however, the PT intends to increase the number of city halls it commands in the country. It would not be good for PT campaigns to face the setback of having to announce work and investment stoppages. So much so that Lula said he intends to focus on national travel in 2024.

Haddad’s credibility, already shaken by difficulties in the Legislature, was practically destroyed in the episode. Who at Faria Lima or in Congress can believe in their proposals from now on? The rule will be to wait for Lula to confirm or not.

An example of what was already happening was the decision to leave the vote on the LDO until December, given the expectation of congressmen that the government could either change its mind or convince deputies and senators to approve proposals that would give more revenue to the Union’s coffers in 2024.

Now, projects that could increase revenue are losing appeal. They could provide at least R$63 billion in revenue to the Union in 2024.

But what motivation will deputies and senators have to approve the text that changes the ICMS (Tax on the Circulation of Goods and Services) investment subsidy, for example?

The government’s estimate was to reach R$168.5 billion in extra revenue in 2024 to eliminate the primary deficit. If the number was already considered unenforceable, Lula completely buried any possibility of achieving it.

In his speech, the president also indicated the size of the change he should accept in the proposal. He said a deficit of 0.5% or 0.25% “It’s absolutely nothing” For the country. Even though the number is below market projections, which indicate a deficit of 0.9%, the values ​​mentioned by Lula could already provide relief for the government next year.

And not just Haddad will have to review his next steps. It will be up to the minister of political articulation, Alexandre Padilha, recalculate the route of your contact with Congress. The question remains as to which path should be followed from now on in the last votes in 2023.

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