Budget: Ministry wants to include medium-term projection – 06/13/2023 – Market

The Ministry of Planning is preparing a change in the format of the Budget to include not only expenditures for each policy in the current year, as is currently the case, but also detailed projections for the next three years.

The plan should run as a pilot in the 2024 Budget proposal and be fully implemented in 2025 – when the proposal will include the spending schedule for the year and estimates for 2026, 2027 and 2028.

The level of detail will be much greater than in the PPA (Pluriannual Plan), which will continue to exist and sets out major objectives and targets for public administration for a period of four years.

The Federal Budget secretary of the portfolio, Paulo Bijos, says that the change will increase transparency on public spending and “correct the myopia” of managers and legislators, who make short-term decisions without foreseeing how this could affect other government actions. in the future.

The government is still debating whether the specification will be made by programs, at a more aggregated level, or by actions, which deepen the information on the allocation of resources. To get an idea of ​​what this means, the different actions of Minha Casa, Minha Vida are included under the umbrella of the Decent Housing program.

“The focus is on prioritizing expenses”, says the secretary. According to him, the new format will expose the consequences, for example, of granting a greater readjustment to civil servants, given the limitation of expenses that should take effect from the new fiscal framework (still in progress in Congress). The result could be less room for other policies.

Eventually, with the approval of the framework, the new Budget will even be able to point out which programs will be at risk of being flattened in the event of a faster advance in mandatory expenses — a trend observed in the expenditure ceiling and which ended up making its maintenance unfeasible.

Bijos points out that it is not certain that there will be compression of discretionary expenses in the medium and long term, but he defends a frank discussion if the data point to this trend.

“It’s important to provide transparency, even if this can cause some noise. Brazil has changed today, we have the IFI [Instituição Fiscal Independente do Senado], analysts who make this calculation. It’s no use if there’s going to be a tight spot… At the spending ceiling, everyone did the calculations. Will there be a discretionary crush? Ok, so let’s show the problem”, he says.

According to the secretary, no legal change is necessary to move forward with the project, since the Constitution already authorizes the government to present multi-year projections for its expenses.

Therefore, on August 31, the government will deliver the 2024 Budget proposal already with a kind of pilot. Estimates will be drawn up to 2027 for actions or programs within a subset of goals and priorities. For the following year, the objective is to expand the model to the entire Budget.

The reformulation is part of a larger agenda to modernize the budgetary process, which foresees five axes: recovering the budget by performance (with physical targets for delivering policies), medium-term budget (with multi-year projections), review of expenses, budget green and new finance law.

Each item is at a different stage of development. “We don’t have a sign of the pace at which this will advance”, says Bijos, who emphasizes that it is a political decision.

The secretary states that one of the objectives of the changes is to better connect the areas of policy evaluation and budget management. However, each one has its particularities: while the assessment agenda addresses expenditures that have already occurred, the reformulation of the Budget makes room for an early analysis of what may happen to public spending based on a given choice.

In the performance-based budget pillar, the objective is to give more visibility to items that are now part of the expenditure schedule and that indicate government goals, such as the number of families assisted with Bolsa Família resources, the number of houses delivered through the MCMV, among others.

“The Budget for performance contemplates five dimensions: economy, efficiency, effectiveness, effectiveness and equity”, says Bijos.

According to him, in a medium-term budget, this type of information can indicate the number of deliveries expected within a mandate, for example. The passing of the years would give an idea of ​​the government’s ability to honor these commitments and contribute to the process of making choices within the Budget.

The secretary states that it would even be possible to measure how many houses or how many services would be compromised in the medium term in case of reduction of that expense to make way for another.