Economists linked to the PT are studying limiting the expansion of spending at the beginning of an eventual Luiz Inácio Lula da Silva (PT) government by using a gradual, rather than immediate, implementation of measures that demand more resources from the National Treasury.
The strategy would reduce the pressure on the 2023 Budget, reduce the size of the extra allowance for expenses to be negotiated with Congress and also alleviate fears in the financial market with the risk of uncontrolled public accounts.
In the recomposition of the minimum wage, the members of the party are studying giving an increase above inflation – as Lula promises, in place of Bolsonaro’s policy –, but implementing this gain only on May 1st, Labor Day (instead of January 1st). ). As a result, the Treasury would have four months (January to April) without the corresponding fiscal expansion.
Every BRL 1 increase in the minimum wage raises total government spending by BRL 389.8 million in the year. The inflation adjustment alone, as foreseen in the current budget proposal for 2023, already generates an impact of R$ 35.1 billion.
In the case of readjustments for servers, party members want to start dialogue with the categories in 2023, but signal that more robust increases would only be applied from 2024 onwards – significantly reducing the pressure on the 2023 Budget.
At the beginning of his term, Lula could also negotiate larger increases, but in installments over the years. The strategy would help to calm the spirits of the civil service categories and, at the same time, soften the impact on public accounts.
The budget proposal that the Jair Bolsonaro government (PL) sent to Congress provides for a readjustment of up to 4.5% for civil servants, a percentage close to the inflation projected for 2023 (without recovering the losses of previous years). The amount set aside for this is R$ 11.6 billion for Executive servants.
According to calculations by the current government, each 1 percentage point of linear adjustment for federal servants means an approximate increase of R$ 3 billion in Union expenses.
Lula’s team is also looking for alternatives to avoid a cut in the payment of R$ 600 to Auxílio Brasil families at the beginning of 2023, in case it is not able to immediately approve the necessary changes in the Budget.
The 2023 budget proposal currently reserves BRL 105.7 billion to fund Auxílio Brasil for 21.6 million families, just enough for an average benefit of BRL 405.21.
Some members of the campaign believe it is possible to use the available funds to continue paying the R$ 600 at the beginning of the year, while the approval of definitive changes in the Budget in the National Congress is sought.
The current allocation of resources would be enough to pay the R$600 to these vulnerable people until the end of August 2023 – by then, it is believed that a definitive solution for the program will have already been implemented.
technicians heard by Sheet claim that the possibility, in theory, is viable from a legal point of view. The elected government would need to issue, at the beginning of the year, an MP (Provisional Measure) with immediate effect implementing the additional portion of the benefit. If there is no permanent source of income to finance it, one way out would be to give it a temporary duration (which would eliminate the requirement for budgetary compensation).
The strategy, however, has a limited duration. In March, the new government will be required to publish the first budget assessment report. If the extra space has not been approved, it will be necessary to cut other expenses so as not to breach the spending ceiling – which would still be in effect.
Party emissaries have already made contact with the budget’s general rapporteur, Senator Marcelo Castro (MDB-PI), to signal that they will need a dialogue channel to resolve the impasse of the budget piece.
PT members say that the total amount of extra expenses in relation to what is foreseen in the current 2023 Budget proposal should be above the R$ 100 billion defended by some houses in the financial market. Projections are above BRL 200 billion and there are estimates going up to BRL 300 billion – a value considered prohibitive, but already on the radar.
There is an understanding that the recovery of public policies is urgent and meritorious, but it will also be necessary to be attentive to the impact of decisions on inflation, interest and, mainly, the exchange rate – which would have to give way. Today, the dollar is around R$5.15 and it would be important for it to stay below R$4.90, defend party members.
In this scenario, the gradual recomposition proposal takes into account that the hole created in the Bolsonarista administration is so large that there is no way to cover the entire account at once, in a single year. In 2023, Lula’s administration could signal that it will recover public policies over time and start a relationship of trust with the interlocutors who demand the increases.
Supporters of this alternative argue that gradualism would also serve to take the pressure off the first year of office and facilitate operational work in the different ministries.
However, say interlocutors, even if the technicians point out values and alternatives for relocation, the final choices will depend on the formation of the team, especially the definition of the ministers. That is, the announcement of measures should be left for after the second round.
Lula also understands that there is a political paving to be done to make the economic agenda of the future government viable. After the second round, PT intends to call a meeting with elected governors and capital mayors to hear the priorities of each one. According to a close assistant, the intention is to sign a kind of pact so that these priorities, including public works, can be carried out.
NEW FISCAL RULE IS UNDER CONSTRUCTION
To assuage market fears, sources linked to the campaign say that the value of the extra allowance for expenses needs to be presented along with the tax rule that will work in place of the current spending ceiling, a replacement under discussion at the Ministry of Economy itself.
The campaign is already analyzing different alternatives, but the formation of new party alliances for the second round —with PDT and MDB, for example— can bring new contributions. The definition will also require approval from the future Minister of Finance to be chosen by the acronym, if elected.
According to reports, there is great adherence to the model defended by former Minister of Finance and Planning Nelson Barbosa – which suggests a mechanism in which the president-elect will define, in his first year in office, what the level of expenditure should be for the next few years. But there is still no consensus on the subject.
Within the group, one of the assumptions adopted is that the new fiscal rule needs to accommodate the country’s spending needs, and not the other way around. Another objective is for the new framework to be credible, without the need for as many changes as in recent years.
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