Government blocks BRL 8.7 billion from the Budget and calls into question an increase for civil servants

The government blocked the execution of BRL 8.7 billion of the 2022 Budget in order not to breach the spending ceiling, which prevents federal spending from growing above inflation. The measure mainly affects the ministries of Science, Education and Health and also includes the amount of R$ 1.7 billion originally intended for the readjustment of civil servants – reinforcing the difficulty of granting increases to civil servants in the face of fiscal limitations.

According to the Ministry of Economy, the reserve of R$ 1.7 billion foreseen in the Budget for the restructuring of careers is being used to reduce the total need to block resources. If it remained untouched, the freeze would have to be even greater.

The blocking of resources for readjustments is made at a decisive moment on the subject. The government has about a month to give civil servants a raise, thanks to the limitation imposed by the Fiscal Responsibility Law (which prevents an increase in personnel expenses in the last 180 days of the mandate).

President Jair Bolsonaro (PL) signaled that he could give privileged increases to police officers, which generated a wave of mobilizations by federal servants for readjustments.

After many back-and-forths, Bolsonaro recently signaled that he may back off from his idea of ​​granting extra raises to security professionals. Minister Paulo Guedes (Economy) said publicly that the only possible readjustment is 5% for everyone. And in recent weeks, the government has admitted behind the scenes that even that cannot end up coming out.

In the case of the Science Ministry, there was a cut of R$ 2.5 billion from the R$ 6.8 billion previously foreseen in the so-called discretionary funds (which the government can postpone, unlike the mandatory). The scissor is equivalent to 36% of the total.

In Education, the scissor was R$ 1.6 billion out of a total of R$ 22.2 billion in discretionary (7.2% of the total). Health, on the other hand, received a cut of R$ 1.2 billion out of a total of R$ 17.4 billion (also 7.2% of the total).

The ministries of Defense (equivalent to 6.2% of discretionary), Tourism (5.6%), Communications (5.6%) and Foreign Affairs (5.6%) also underwent cuts. Also on the list are the Presidency of the Republic (5.65) and the Central Bank (5.6%). Rounding out the list are Justice (4.2%), Regional Development (3.8%), Women (3.7%), Mines and Energy (3.4%), Infrastructure (2.6%) and Citizenship (2.1%).

Although the reduction is officially called a blockade –which gives the measure a temporary connotation–, in practice, government officials call the initiative a cut. This is because, unlike in other years, in 2022 the big problem in budget execution is the spending ceiling (and not the Treasury’s result target). So, in this scenario, the growth of other expenses leads to a de facto cut – even if revenues grow.

The rising expenses this year are mainly from court rulings and agricultural financing subsidies.

Last month, the government detailed the need for cuts through its bimonthly income and expenditure report. The greatest pressure comes from RPVs (small value requisitions), convictions suffered by the Union in the amount of up to 60 minimum wages, and court sentences. The value rose R$ 4.8 billion.

Although the National Congress approved last year a sub-ceiling for precatories, which also covers these RPVs, this limit is applied in the preparation of the Budget.

If the projected spending on sentences rises over the course of the year, as has been the case now, the government needs to meet this need by cutting other non-mandatory expenditures. It is not possible to cut the other precatorios already accounted for in the sub-ceiling.

It was also necessary to increase by R$ 2.3 billion the forecast of resources of the Safra Plan, which finances the producers of the crops. The funds will finance the reopening of operations for the 2021/2022 period (R$ 1.1 billion) and the launch of the 2022/2023 Plan, in July (R$ 1.2 billion).

The technicians also mapped the need to increase by R$ 2 billion the budget for Proagro, a guarantee program for financing in the rural sector.

There is also an increase of R$ 1.9 billion in the forecast of expenses with the payment of the salary bonus — a kind of 14th salary paid to workers with a formal contract and who earn up to two minimum wages — and of R$ 0.9 billion in the BPC (Continued Payment Benefit).

Some expenses, such as social security benefits and personnel expenses, fell, so that the balance of the impact on the Budget was R$ 8.2 billion.