Rogério Ceron, from the Treasury, criticized the maintenance of the base interest rate at 13.75% per annum due to the impact on public debt trends, since a third of it is linked to the Selic
BRASILIA – The secretary of National treasure, Rogerio Ceronesaid on Monday the 26th, that the tax reform it will have no immediate impact on the budget for the next few years due to the transition period.
In the case of federal tax unification, the transition is expected to begin only in 2026, when this will be taken into account in the budget proposals. “(Tax reform) is going well and we should have the voting process (in the House) next week,” he assessed.
Ceron also spoke to Congress about the evolution of the fiscal framework and affirmed that the government tends to support, in the House, the inclusion of the Constitutional Fund of the Federal District (FCDF) in the spending limit, canceling an amendment that took place last week in Senate.
“We support that the Chamber of Deputies examine (DF Constitutional Fund) and return to the ceiling. We understand that it was a correct provision by the Chamber. It is not a question of cutting resources, but of adapting the correction process for the future, “he said in an interview with BM&C News.
For the text to advance in the Senate, the rapporteur, Omar Aziz (PSD-AM), withdrew from the spending limit the Fund for the maintenance and development of basic education and the enhancement of education professionals (Fundeb), the Constitutional Fund of the Federal District (FCDF) and expenses with science, technology and innovation.
According to Ceron, bringing the FCDF back to the limit would bring more federal equality, because the Federal District already has a higher per capita budget than the other states and, with the fund, this difference triples.
“When the text was approved, in the House, there was a minimum of consensus in the search for balance and a text was approved that minimally assisted all the actors. Validated changes,” he said.
He highlighted a change claimed by the government and materialized in an amendment suggested by Senator Randolfe Rodrigues (without party-AP). It proposes that the limit for conditional spending be the difference between the Extended Consumer Price Index (HICP), the country’s official inflation, accumulated in the 12 months up to June and that carried out up to December of the previous year.
“Because of everything that happened in the second half of last year, a very strong exemption process has generated artificial inflation, we have had bad months and this reflects a distortion in the accumulated 12-month period. Inflation since June in July it creates problems, because the social benefits are inflation-adjusted for the year,” he mused.
Ceron also underlined that, in the Chamber, the rapporteur, Claudio Cajado (PP-BA), had already foreseen the possibility of opening an additional credit after the official calculation of inflation, but that the Ministry of Planning believes that this creates an obstacle and asked for a change to the proposed rule in the Senate.
The national treasury secretary also said that increased tax collection is not essential to the fiscal framework but rather to meeting aggressive primary outcome targets set by the economics team, which wants a neutral result in 2024 followed by surpluses in following years .
“Revenues are not essential to the framework itself, but they are important to achieve the primary objectives. The essence of the framework is to continue to limit spending, which will grow in proportion to revenues. As we understand that the fiscal adjustment process will bring greater benefits if it is more intense, we set more aggressive headline targets, which must recompose the tax base and reduce tax expenditures to grow the surplus from 2024″, he assessed.
Ceron reiterated once again the importance of reviewing tax breaks, to analyze which expenditures are worthy and which ones need to be discussed. As an example, he cited the state subsidies that were the basis for calculating the results of the federal tax, discussed in the Superior Courts with a favorable outcome for the Union.
GDP projections
Ceron noted that the market has “brutally” revised its growth projections for the Brazilian economy in just over a month, referring to the Focus Bulletin. GDP projections indicate growth of 2.18%, compared to 1.26% a month ago.
“Regarding economic growth, the market has sharply revised and we are almost 2.2% into an adjustment process, and should probably approach 2.5%, which is what the major houses are starting to signal. and that’s what we understand should come close,” he said in commenting on the projections.
The secretary highlighted that the general improvement in the indicators reflects the measures being taken by the government, with the search for deficit reduction, the priority given to the new fiscal framework and tax reform, attention to cases of tax litigation and the support the PPP market growth.
For him, the approval of the measures with the framework and the tax reform will culminate in the reassessment of country risk by the rating agencies, given that there will be the launch of important structural reforms. “Projections are legitimate, but time tells the story and shows who is right in forecasting and who is not,” he said.
Impact of the interest rate
Ceron said it is “obvious” that the interest rate has an impact on the trajectory of government debt. He recalled that a third of the debt is linked to Selic.
According to him, with the expectation that inflation will end the year close to 5%, the real interest rate with the Selic at 13.75% is “very expressive”. In the context in which GDP is revised upwards and inflation downwards, there is room for the Central Bank to evaluate the monetary easing process, which is important for the recovery of investment, capital financing and public debt, he said.
“In fiscal policy, it is obvious that we want the real interest rate to be as low as possible as soon as possible. It has the same impact as the primary outcome,” he mused.
Ceron defended an assessment of the impacts of conducting monetary policy, because it is important for inflation to converge towards the target, but the interest costs will be paid by the company.
He recalled that the monetary easing process will define the direction of the economy for 2024, because this year the forecast is for growth of 2.5% considering a modest but reasonable value. He recalled that this performance is driven by the agri-food industry, as the industry has withdrawn and household consumption has not advanced.
Ceron defended the harmonization of fiscal and monetary policies in order to conduct a coherent economic policy. He says there is no tax burden on the economy this semester, but monetary policy is not watertight.
On Selic’s changes, whether for August or September, the minister said it was not up to him to give an opinion.
New Treasury Bill
According to Ceron, the Treasury is preparing the launch of a product aimed at the educational cycle for August. He points out that Direct Treasury, a program to sell federal government bonds to individuals, is a priority for the portfolio and the strategy to launch segmented securities, such as Renda+ for retirement, has been successful.
The strategy, he said, is to offer a product that fits into the pockets of families, regardless of income bracket. He recalled that since the average direct Treasury ticket is low, around R $ 30 a month, even low-income families can prepare for the investment to pay for their children’s university, in what he classified as an effective tool for break the poverty cycle.
The secretary also said the Treasury plans to move forward so that the use of bonds will be used to reduce credit, such as for the purchase of a vehicle, emergency credit and even rental guarantees. For the second half, the plan is to move forward with sustainable bond issuance.
Source: Terra
Rose James is a Gossipify movie and series reviewer known for her in-depth analysis and unique perspective on the latest releases. With a background in film studies, she provides engaging and informative reviews, and keeps readers up to date with industry trends and emerging talents.
