Government details blocking of R$13.3 billion in the Budget; Health and Cities were hardest hit

Expense containment was R$15 billion and was reduced by the government on the 20th; This measure is part of the challenge of complying with tax rules. Measure reduces parliamentary amendments by R$ 974.8 million Unsplash The Ministries of Health and Cities remain on the list of departments most affected by the blocking of expenses in this year’s Budget. The federal government detailed on Monday night (30) the tightening of spending for 2024. The measure was necessary so that fiscal rules (of public accounts) are complied with. The details of cost containment were published in an extra edition of the Official Gazette. Even the areas considered priorities by President Luiz Inácio Lula da Silva (PT), such as health and education, were affected. Parliamentary amendments were also blocked. The Ministry of Health had a reduction of R$4.5 billion, and the Ministry of Cities lost R$1.8 billion. The Education portfolio was also affected, with a cut of R$1.4 billion. The measure reduces parliamentary amendments by R$974.8 million. The Growth Acceleration Program (PAC) lost R$3.7 billion. Budget 2025: government estimates that revenue will reach the highest level in 15 years Fiscal rules Two months ago, the government had already made an adjustment to follow the rules of two mechanisms for controlling public accounts. One of them is the fiscal framework, which provides that the spending growth limit is 2.5% per year, discounting inflation. If the expected expenses for the year exceed this ceiling, the government imposes a blockade. This mechanism is more difficult to undo. Another rule is the fiscal target. The government’s goal this year is to spend only what it can raise. It’s called zero deficit. This account does not consider financial expenses, such as debt interest expenses. To prevent this limit from being exceeded, the government makes a contingency — freezes expenses. Contingency is easier to undo. These expenses can be released again, for example, if there is higher-than-expected revenue. Expense containment is done in the non-obligatory budget of ministries. Therefore, the adjustment is made in investments and cost expenses, such as electricity and water, daily allowances and tickets and communications services. The government’s goal is zero deficit. But, according to the rules of the fiscal framework, there is a band of 0.25 percentage points of GDP above and below the fiscal target. The maximum shortfall is R$28.8 billion. At the end of July, the government had made an adjustment of R$15 billion, of which R$11.2 billion was blocked and R$3.8 billion was contingency. Now, in September, the contingency was completely dismantled. On the other hand, the government expanded the blockade by R$2.1 billion. Therefore, the total cut currently amounts to R$13.3 billion. Greater tightening in Health Despite the government having reduced restraint in the Budget as a whole, the Ministry of Health suffered an increase in spending cuts. Two months ago, the department had lost R$4.4 billion. Now, this value has risen to R$4.5 billion. The other ministries, in general, had budgetary relief in the same period. The government has not yet presented a list of which programs and actions from each ministry will be affected by the cuts. According to the Ministry of Planning, this will be done by October 7th, the deadline that each body has to indicate how the blocking will be done in the expenses planned for the year.



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