Lula’s Third Term Sees Largest State Enterprise Losses in Two Decades
In the first two years of Luiz Inácio Lula da Silva’s third term as president, Brazil’s state-owned companies have accumulated a significant deficit. Federal, state, and municipal state-owned enterprises recorded a deficit of R$9.76 billion ($1.74 billion) adjusted for inflation.
This negative balance marks the largest deficit of the 21st century in less than two years. In 2023, expenses exceeded revenues by R$2.43 billion ($433.93 million). From January to August 2024, the deficit reached R$7.33 billion ($1.31 billion).
The Central Bank of Brazil has been collecting data since 2002. The current deficit surpasses the one recorded during Dilma Rousseff’s first term, which stood at R$7.53 billion ($1.34 billion) in today’s values.
This negative balance reverses part of the R$31.16 billion ($5.56 billion) surplus achieved during Jair Bolsonaro‘s government. From January to August 2024, state-owned companies at different levels of government showed varying results:
- State companies: deficit of R$3.90 billion ($696 million)
- Federal companies: deficit of R$3.45 billion ($616 million)
- Municipal companies: surplus of R$21.6 million ($4 million)
Finance Minister Fernando Haddad addressed concerns about potential changes in the status of state-owned companies. He clarified that the government aims to reduce federal contributions to companies capable of financial independence, rather than altering their status.
Lula’s Third Term Sees Largest State Enterprise Losses in Two Decades
The Ministry of Management and Innovation in Public Services provided additional context. They stated that the deficits are covered by the companies’ own funds and do not require resources from the National Treasury.
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The ministry also explained that part of the negative balance is due to investments made with funds received in previous years.
This situation highlights the complex nature of managing state-owned enterprises and the ongoing challenges faced by the current administration in balancing fiscal responsibility with economic growth.
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