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National Treasury discusses state fiscal situation in seminar

Subnational loved ones

Results are available in the Annual Finance Bulletin released this Wednesday (14/8) by the Ministry of Economy.

The fiscal situation of the Brazilian states was the subject of a finance seminar promoted on Wednesday (14/8) by the National Treasury Secretariat of the Ministry of Economy. Debt, risks and proposals for the fiscal crisis of subnational entities were discussed at the event, based on the results presented in the Annual Finance Bulletin, launched at the seminar with the aim of increasing transparency and fostering discussions about the finances of the subnational entities. states and municipalities.

For the special secretary of Finance, Waldery Rodrigues Júnior, who made the opening, a joint effort is needed to balance public accounts, avoiding fiscal stress. "We are in the 6th year of fiscal deficit and, if the necessary changes are not promoted, are at least another three years of deficit, something unheard of in the Union's historical series," he said.

In order to have a fiscal balance, the secretary pointed out, it is necessary to control specific expenses, especially those related to primary expenses - focusing on personnel expenses -; and a federative pact between federal, state and municipal governments; and the Legislative and Judiciary powers. "We can't just be about transferring resources to states," he warned.

The social security and tax reforms were also considered essential for a balance of public accounts, especially the inclusion of states in the proposed changes. National Treasury Secretary Mansueto Almeida commented on the financial situation of the states, drawing attention to the primary result, which improved last year, from a deficit of R $ 13.8 billion in 2017 to a result. positive R $ 5.6 billion last year.

"We have to emphasize that if we put the non-committed expenses there, the result would be a deficit of $ 5.8 billion," said Mansueto. He considered, however, that the number is still very good, the result of strong growth in state revenues and an increase in oil royalties. Mansueto also pointed out that public investments in the states were stagnant between 2017 and 2018, reaching in the two years, $ 41 billion.

"States are unable to control expenditure growth," he said, noting numbers in the newsletter that 12 of the federal states are spending above the Fiscal Responsibility Law (LRF). According to the methodology used by the PAF, only three states - Distrito Federal, Espírito Santo and Rondônia - recorded a ratio between personnel expenses and net current revenue of less than 54%, which is the alert limit established by the LRF.

Expenses

The increase in state spending was also the focus of the study presented by the executive director of the Independent Fiscal Institution (IFI), Felipe Sato. “All states have significantly increased their expenses. Without a federative pact, we are in danger of running out of control, ”he warned.

Claudio Hamilton, from the Institute for Applied Economic Research (Ipea), also drew attention to the increase in spending, mainly on inactive personnel, which has maintained a growth of 5% per year. "Those eligible for retirement reach 2.2 million people in the 21 states by 2026," he said.

Proposals

International Monetary Fund (IMF) Representative Paulo Medas said the major challenge is to ensure a sustainable level of debt, as crises in key public services affect the private sector. Medas warned that the solution to the situation of excessive indebtedness requires strict fiscal rules and that, in Brazil, the rules are not followed and sanctions do not happen.

“The Union is the largest creditor, with 90% of its debts, and political pressures coupled with judicial decisions hamper sanctions. States are very dependent on Union guarantees and those with more debt have better credit costs. ”

For the IMF representative, there is a need to create incentives for balance of accounts and comprehensive tax reform, with strict insolvency rules and fiscal transparency.

Another supporter of strict rules was the Federal Senate legislative consultant, Marcos Mendes. “The state numbers are very large and at least 14 of them have no money to pay off debt. Expenses grow faster than revenues, especially personnel expenses. We lost track in 2008 and Social Security spending has made the problem even worse, ”he warned.

Judicialization is also a problem, according to the consultant. "Lawsuits have passed costs to the Union, which loses 92% of its causes." In addition, Mendes also cited as aggravating the budgetary autonomy of states, the creation of rules that protect and generate costs and the linking of revenues.