Bolsonaro reduces to R$ 10.5 billion reserve for server readjustment in 2023

The Jair Bolsonaro (PL) government must propose, in the submission of the 2023 budget piece, a reserve for readjustments of the executive branch’s civil servants lower than the amount initially signaled to the categories.

The volume of resources stamped for this purpose should be BRL 10.5 billion — a 10.3% cut from the BRL 11.7 billion announced in the submission of the 2023 LDO (Budget Guidelines Law) last month Of april.

According to government sources heard by the Sheetthe reserve decreased after the forecast of spending on other mandatory expenses turned out to be higher than projected.

Despite the lower value, the maintenance of the reserve is seen within the government as an important indication, after a series of demonstrations and stoppages triggered by different categories.

Bolsonaro had promised to raise salaries for Federal Police, Federal Highway Police and Depen (National Penitentiary Department) this year. The 2022 Budget set aside BRL 1.7 billion to serve these careers, but the localized concession aroused the ire of other categories.

The president even gave the go-ahead for a 5% linear readjustment for civil servants as an alternative to alleviate general dissatisfaction, but the cost would be R$ 7 billion for the Executive alone. With no room for cuts in other areas, the idea was eventually abandoned.

Now, the Chief Executive has renewed the promise of a readjustment, which has been used as a nod to categories that are part of his base of supporters at a time when he seeks re-election.

The reserve alone, however, is not enough to secure the increase, which needs to be channeled into a specific project. The budget proposal also does not detail the format of the adjustment.

Government sources say the raises may be selective, that is, for some careers. The government is also studying using the inflation forecast for 2023 as a reference for readjustments, given that it will be lower than this year’s.

Despite the estimates, the scenario is still one of great uncertainty about the final design of the Budget to be approved by Congress. Technicians know that the proposal that will come out of the Executive on August 31 will be significantly altered, in the wake of the results of the elections.

Brazil aid of R$ 600 should lead to new tax rule

The two main candidates for the Palácio do Planalto, Bolsonaro and former president Luiz Inácio Lula da Silva (PT), have already promised to maintain the minimum amount of R$600 for beneficiaries of Auxílio Brasil, scheduled to end on December 31 this year.

The extension of the additional R$ 200 has a cost of R$ 52 billion and does not fit into the current spending limit given by the ceiling — a rule that limits the advance of expenses to inflation.

Although the matter is considered delicate, behind the scenes there is recognition that the promise to keep Auxílio Brasil at R$ 600 should lead to a discussion of softening the fiscal rule.

Before that happens, however, the Budget will be forwarded with a forecast of R$ 106 billion for Auxílio Brasil, which guarantees the payment of R$ 400 to the 20.2 million families currently served by the program.

Technically, the Executive is obliged to follow the legal frameworks in force, such as the spending ceiling. There is fear among the president’s aides that the lack of resources to honor the promises is a point politically exploited by opponents during the campaign.

Therefore, the political wing’s strategy is to include, in the presidential message that accompanies the budget proposal, the promise that the value of Auxílio Brasil will be kept at R$ 600.

The citation would serve as a signal in favor of the measure, although technicians recognize that this has no practical or legal effect on the permanence of a more robust program.

The inclusion of promises in an election year in the Budget sending message is also considered unusual by the more technical wing of the government.

The same will be done with the correction of the IRPF table (Individual Income Tax), a promise made in 2018 by Bolsonaro, not fulfilled and which has also been rescued by the president.

Although the government discussed a partial correction, which would have an impact of R$ 17 billion on revenue, this measure ended up being left out of the proposal to be sent to Congress.

On the other hand, the Ministry of Economy included the maintenance of exemption from federal taxes on diesel and gasoline, as anticipated by the Sheet. The measure, approved amid the government’s attempt to lower fuel prices by force, would also be valid until the end of 2022.

The extension of this exemption should drain R$ 53 billion in revenue, according to internal estimates.

With this, the deficit forecast for 2023 should be R$ 65.7 billion, very close to the target, which allows a negative result of up to R$ 65.9 billion.