Without a framework, there is only money left to maintain the machine – 04/17/2023 – Market

Minister Simone Tebet (Planning) said this Monday (17) that, without the approval of the fiscal framework, the expenses of the Luiz Inácio Lula da Silva (PT) government with public policies, such as the Bolsa Família and Minha Casa, Minha Life, may be compromised in 2024.

If the new fiscal rule does not go ahead, of the total of R$ 196.35 billion in discretionary expenses estimated for next year, only R$ 24.35 billion will remain for free spending by the ministries —which include administrative expenses such as electricity bills and water.

“These BRL 24 billion are just for the cost of the machine, so that the machine doesn’t stop. As a result, we practically have zero room for discretionary expenses”, stated Tebet.

The numbers are in the PLDO (Budget Guidelines Bill) of 2024, which was sent to the National Congress last Friday (14). In the document, the government conditioned the possibility of expanding next year’s expenses by R$ 172 billion above what is allowed by the spending ceiling to the approval of the new fiscal framework.

The portfolio justifies that the excess is high due to the R$ 145 billion space opened by the constitutional amendment for this year and the need to correct the index used in the calculation of the ceiling for 2023, in the amount of R$ 23.7 billion.

“If the R$ 172 billion conditioned on discretionary expenses, the condition would reach practically all of these expenses. Such a situation would affect not only the maintenance and operation of the bodies, but also priority public policies for the Country”, said the Ministry of Planning and Budget on presentation.

The strong restriction of resources may impact actions such as Minha Casa, Minha Vida, a housing program aimed at the low-income population, granting and funding of Capes research grants, resources for federal highways and roads, among others.

The target set for public accounts in 2024 seeks to zero the primary deficit in the next year, but allows for fluctuation around the target in an amount equivalent to 0.25% of GDP (Gross Domestic Product), with a deficit of R$ 28.7 billion at the lower limit and a surplus of the same amount at the upper limit.

The PLDO also forecasts a surplus of BRL 61.6 billion (0.5% of GDP) in 2025 and BRL 130.8 billion (1% of GDP) in 2026 in the central objectives — also with a tolerance interval. The numbers refer to the central government (which includes the National Treasury, Social Security and Central Bank).

For states and municipalities, the forecast is for a deficit of BRL 6 billion in 2024, but a surplus of BRL 1 billion in 2025 and BRL 1.1 billion in 2026.

The document also shows that the Lula government expects the minimum wage to rise to R$1,389 in 2024, with no real increase. But the value is not definitive.

The forecast amount only considers the correction of the value forecast for December 2023 by the INPC (National Consumer Price Index), focused on the inflation felt by lower-income Brazilians, which is projected by the government at 5.16%.

“Eventual new readjustment rules, which provide for real increases in the minimum wage, will be opportunely incorporated into the fiscal scenario when the annual budget law is drawn up”, the ministry said in a note.