Candidate economists suggest license to spend in 2023

Economists from the campaigns of Luiz Inácio Lula da Silva (PT), Ciro Gomes (PDT) and Simone Tebet (MDB) defended this Thursday (15) a relaxation of fiscal rules to accommodate a series of expenses not foreseen by the government in the budget proposal. 2023, which may require a new PEC (Proposed Amendment to the Constitution).

The measure would work as a kind of temporary license to carry out actions such as an Auxilio Brasil worth R$600 next year, before the definition of a new rule to replace the spending ceiling – which prevents federal spending from growing above inflation, limit criticized by almost all candidates.

Economist Guilherme Mello, representative of the PT, cites calculations that point to R$ 430 billion in fiscal risks, additional expenses, revenue losses and financial costs that must be observed by the next government.

In expenses alone, the estimate is at least R$ 120 billion in expenses not covered in the Budget and that will need to be accommodated to avoid a blackout in social programs.

The bill was disclosed by economists Bráulio Borges and Manoel Pires in a bulletin issued by Ibre/FGV and includes the cost to ensure the maintenance of a minimum benefit of R$ 600 for Auxílio Brasil families. Today, the Budget proposal contemplates an average benefit of only R$ 405.21.

“On January 1st, if we do nothing, we create a social abyss, and we need to prevent that from happening. It is unthinkable to return with an aid of R$ 400”, said Mello. “I think a PEC will have to be approved, because the problem lies in the spending ceiling,” he added.

Nelson Marconi, economist at Ciro’s campaign, considers a provisional tax rule necessary to cross the year 2023. “Obviously you cannot fail to pay aid. There will have to be a temporary rule for next year,” he said.

He stressed, however, that the license will not necessarily imply a worsening in fiscal indicators. The economist said it is possible, in return for higher spending, to review tax subsidies, remove unnecessary products from the basic food basket exemption and cancel the rapporteur’s amendments (an instrument used by Palácio do Planalto as a bargaining chip in negotiations with Congress).

Mello and Marconi participated this Thursday in a seminar organized by Cofecon (Federal Economic Council) with economic advisors to the presidential candidates, followed by a press conference.

The campaigns of candidates Jair Bolsonaro (PL), Simone Tebet (MDB), Luiz Felipe D’Ávila (Novo) and Soraya Thronicke (União Brasil) were also invited to participate in the event, but did not appoint any representatives.

Minister Paulo Guedes (Economy), however, has already made statements in the sense of making fiscal rules more flexible to increase spending next year.

He declared that the minimum benefit of R$600 for Auxílio Brasil will be paid in 2023 and even mentioned the possibility of declaring a calamity or extending the current “state of emergency”, created to pave the way for increased spending this year, as a solution. temporary to the stalemate.

“Obviously we are going to pay. There is a temporary solution. If the Ukrainian War continues, it extends the state of calamity, and then you continue with R$600,” Guedes said at the beginning of the month. Sought, the Ministry of Economy preferred not to comment.

In the budget submission itself, the government also included a message committing to negotiate with Congress a solution to the issue.

Elena Landau, a member of the Tebet campaign, told Sheet that there is a need for fiscal flexibility in 2023, but advocates that it be as little as possible.

“I don’t like waiver’s word [perdão ou licença, nesse caso para gastar] because it seems that you are opening a series of exceptionalities. Our discussion is just to incorporate the R$ 200 from Auxílio Brasil [para chegar nos R$ 600]. It’s the least amount of easing possible,” she said.

In addition, she considers it essential to implement a comprehensive review of the 2023 figures. “As this Budget came to be completely unfeasible, with inverted priorities, undue tax relief, we think that, at this moment, we have to, after winning the election, review the entire Budget”, said Landau.

The pressure for a recomposition of these expenses in the processing of the Budget has already put the request for a license to spend on the radar of market analysts. This authorization is seen as necessary for the next president to be able to cross the year 2023 while a structural adjustment in fiscal rules is discussed.

The size of the allowance for extra spending in 2023 is, for the financial market, one of the great unknowns of the Budget. Among analysts, there is a perception that the license cannot be a “train of joy” to meet all the desires for more expenses, under penalty of undermining the credibility of the fiscal trajectory already in the beginning of the government.

PT representatives have been defending since the end of last year, at least, the adoption of a fiscal rule that replaces the spending cap, although the design to be proposed in case of Lula’s victory is not yet known.

Meanwhile, the Ministry of Economy is also studying a new anchor, based on public debt. The logic of the proposal is to allow an increase in spending above inflation when indebtedness is below a certain level.

Mello says that the PT has not yet discussed internally what the new rule will be and that this will depend on the political scenario for next year. For him, however, the new fiscal framework will need to respect principles such as credibility, predictability, transparency and flexibility.

He also believes it is important to maintain the rule’s countercyclical bias, that is, that it allows government action to mitigate the effects of economic cycles – minimizing the negative effects of a recession, for example.

Marconi, on the other hand, defends the maintenance of a rule that focuses on controlling expenses, although different from the current spending ceiling. For the economist of Ciro’s campaign, it is necessary to allow a growth in expenses at a pace above inflation. This anchor would be associated with another rule that seeks to control public debt.