FAT needs BRL 5.1 billion to avoid going into the red – 04/22/2023 – Market

Government technicians calculate that the FAT (Fundo de Amparo ao Trabalhador) —which provides resources for unemployment insurance and salary bonuses, in addition to being the main financier of the BNDES (National Bank for Economic and Social Development)— will return to the red in 2023 after two years of positive results.

Technicians warn that measures are needed to raise available resources and avoid an imbalance over the next few years to pay for existing legal obligations. The diagnosis is presented while the government plans to intensify the use of fund resources and allocate up to R$ 4.6 billion per year to new programs.

The analysis was carried out by the Ministry of Labor and Employment and points to the need to seek an extra R$ 5.1 billion in 2023 to avoid the hole. The folder’s suggestion to solve the problem is to increase the use of resources raised with PIS/Pasep, which supply the FAT.

The government’s assessment of the FAT is carried out annually in compliance with the Fiscal Responsibility Law and is part of the annexes of the PLDO (Budget Guidelines Bill), whose version for 2024 was sent to Congress this month.

The latest analysis reverses the assessment made last year. At that time, the government concluded that FAT revenues would grow by 2025 at a faster pace than expenditures; and at a level sufficient to meet legal obligations and preserve the financial balance of the fund.

In the document sent this month to parliamentarians, estimates are for revenues growing at an average of 7.94% until 2026; and expenses 10.01%. From 2023 to 2026, the accumulated deficit would reach R$ 13.1 billion.

“Estimates indicate that FAT revenues will not be sufficient to meet the projections of its legal obligations, generating a financial imbalance in the fund”, says the Ministry of Labor and Employment in the note.

“The projections drawn up point to new financial imbalances in the FAT accounts for the years 2023 to 2026, signaling the need to adopt immediate measures to increase the transfer of resources from the PIS/PASEP Contribution in the year 2023, and to increase the transfer of resources in the years 2025 and 2026, to meet the payment of mandatory expenses of the Fund”, say the technicians.

The worsening of projections is calculated while the government intends to direct significant and growing resources from the fund to professional qualification. In 2022, for example, it was R$ 19 million for the item. In 2023, the intention is to allocate R$ 136 million; in 2024, BRL 2 billion; in 2025, BRL 3 billion; in 2026, R$ 4.5 billion.

According to the note, the calculations considered professional qualification programs to be supported by the ministry “to expand the process of increasing the productivity of the economy and the increase in the time a worker remains in a job”. The text does not detail what these actions are.

In addition, FAT expenses are under pressure to raise the minimum wage. It is estimated that for every R$1 increase in the minimum wage in 2023 there will be an increase in unemployment insurance expenses of R$33.4 million.

The folder estimates that the FAT annually executes, until 2026, BRL 446.7 billion in obligations, with an average of BRL 111.7 billion per year.

With current expenses (including unemployment insurance, bonuses and professional training), the projected average execution is R$ 87.55 billion per year. In the case of capital expenditures, related to transfers to the BNDES (the FAT needs to transfer 28% of the revenue from the collection with the PIS/Pasep to the bank), the annual average is estimated at R$ 24.11 billion.

Another point to which the Ministry of Labor and Employment draws attention is the tax reform, which can merge taxes and change the destinations currently provided for in the Constitution.

“Government actions are needed to alert all actors involved in the process of legislative change about the need to maintain FAT revenue sources to support its constitutional obligations”, says the folder.

Questioned on the subject, the Ministry of Labor and Employment did not send any comments beyond those already made in the technical note. The National Treasury and BNDES were also contacted, but did not comment.