The Public Finance Council (CFP) believes there will be a budget surplus as early as 2024, three years earlier than what the Treasury Department had estimated when it presented its 2023-2027 stability program, according to an analysis released this Monday .
The entity starts by reminding that the stability program (PE/2023) stipulates “that the fiscal balance of public administrations (PA) should improve by 0.5 percentage point [pontos percentuais] between 2022 and 2027, with a surplus of 0.1% of GDP [Produto Interno Bruto] at the end of the projection horizon”, as “this value, which underpins a primary balance of 2.9% of GDP in 2027 (+1.3 percentage points compared to 2022), will result from a more pronounced reduction in the weight of spending in GDP than expected for the recipe”.
However, “the recalculation of the CFP for budgetary variables, based on the balance calculated by the National Statistical Authorities for the year 2022 and the premises of PE/2023, points to a return” to a “situation of surplus three years earlier than provided by the Ministry of Finance (MF)”.
According to the entity led by Nazaré da Costa Cabral, “this recalculation indicates that the budget balance will reach a surplus of 0.4% of GDP from 2024 to stabilize at that level by the end of 2027,” he said, pointing out that ” this The divergence stems from the fact that the totality of the recalculation of interest charges points to a lower weight in GDP than envisaged in the Stability Programme, as the primary balance (excluding interest) shows an overall improvement in line with the forecast in PE/2023 , although slightly less pronounced”.
As for the weight of government revenue in GDP, the GVB calculates that it will fall more than the government estimates.
Thus, “according to PE/2023, the weight of government revenue should fall from 44.4% of GDP in 2022 to 42.2% of GDP in 2027”, and “this decline predicted by the MMF will exceed the expected reductions for translate the weight of taxes and contributing revenue (the weight of indirect taxes should fall by 0.7 pp of GDP and direct taxes by 0.6 pp of GDP) and for the weight of residual government revenue (-0 .7 pp of GDP)”.
In turn, “the recalculation of the CPF points to a reduction in the weight of this aggregate from 44.4% of GDP in 2022 to 41.7% of GDP in 2027, a sharper decline than predicted by the MF difference. contributes to tax and premium revenue (-0.3 pp of GDP) and, to a lesser extent, non-tax and non-contributory revenue (-0.2 pp of GDP),” he indicated.
With regard to government expenditure, the CFP recalled that, according to estimates, its weight “decreases from 44.8% of GDP in 2022 to 42.1% of GDP in 2027, due to cumulative growth in nominal GDP (27 .9%) higher than that of expenditure”. in nominal terms (20.4%)”, with “the behavior of primary current expenditure (-2.9 pp of GDP) and capital expenditure (-0.6 pp of GDP) contributing to this reduction”.
Already “according to the recalculation prepared by the CFP, the weight of public expenditure in GDP should be reduced from 44.8% to 41.3% between 2022 and 2027, this trajectory depending on the implementation of the measures and the respective amounts provided in PE /2023”.
Finally, the CFP recalled that, according to PE/2023, debt as a percentage of GDP “should continue the downward path it has been on since 2017 (only interrupted in 2020), after falling in the year 2022 and expected to continue in 2027 decline by up to 92% of GDP, mainly due to nominal GDP growth”.
Source: DN
