The rapporteur-general for the 2023 Budget, Senator Marcelo Castro (MDB-PI), estimates that at least R$ 100 billion will be the adjustment in the accounts for next year to be made between parliamentarians and the team of the president-elect, Luiz Inácio Lula. da Silva (PT).
Optimistic about the possibility of voting on the proposal until December 16, Castro will have a first meeting with members of Lula’s team next Thursday (3).
He will receive the transition coordinator and vice president-elect, Geraldo Alckmin (PSB), and the former governor of Piauí and senator-elect Wellington Dias — designated as PT interlocutor in the Budget negotiations and quoted to become a minister in the new government. Ex-minister Aloizio Mercadante, who works in the transition, and other parliamentarians also participate.
Negotiations are still incipient, and the rapporteur intends to first hear the proposals of Lula’s team and only then forward a solution. The diagnosis, however, is categorical. “The budget is super tight, we have no room to change anything”, says the rapporteur to Sheet. “With the roof we have, there’s nowhere to take it from.”
Although changes in the spending ceiling are already expected by economists, the rule (which prevents spending growth at a pace above inflation) remains in effect. Therefore, it may be necessary to approve a PEC (Proposed Amendment to the Constitution) to authorize extra expenditures. This license has been called a “waiver” by the financial market.
Castro says that other alternatives are being studied by the technicians, but he emphasizes that he will also listen to the ideas brought by the PT at the Thursday meeting before closing his opinion.
The most urgent initiative is to secure the R$52 billion to maintain the minimum payment of R$600 to beneficiaries of Auxílio Brasil. “There are no political conditions for not complying with the R$ 600, it was a public commitment”, says Castro.
Another R$ 18 billion will be needed to fund the extra benefit of R$ 150 per child up to 6 years old in Auxílio Brasil. The correction of the IRPF (Individual Income Tax) table, guaranteeing an exemption range for those who receive up to R$ 5,000, as promised by Lula, would cost another R$ 21 billion in revenues.
There is also the promise of a readjustment above inflation for the minimum wage, which impacts pension expenses, and the need to recover funds from social programs.
The senator’s assessment, however, is that the new government has more room for maneuver on these fronts. Such as Sheet showed, the PT itself evaluates using a certain gradualism in the adoption of some measures that have an impact on public accounts.
The rapporteur also sees the need to act to remove the risk of even greater compression of expenses. Therefore, he anticipates that he must maintain the parameters used in the preparation of the Budget proposal, to ensure a greater correction of the spending ceiling, despite the deceleration of inflation.
The piece was shipped with an expansion of 7.2% at the limit, reflecting the projection for the IPCA (National Broad Consumer Price Index) in August. Today, analysts’ forecast is 5.6%, according to the Focus Bulletin. Updating this parameter to the lowest level would flatten the spending ceiling and create an additional difficulty for Congress in approving the Budget.
“The government has projected a readjustment for the 2023 Budget of 7.2%. We are working with that number, the number will be that one. If it depends on me, no [vamos revisar]”, says Castro.
The constitutional amendment that expanded the spending cap at the end of last year, to accommodate the first expansion of Auxílio Brasil, changed the way in which the cap was corrected, which previously used inflation accumulated in 12 months through June. As it was an already known index, there was no room for manoeuvre.
Now, the inflation used is that of the end of the year, which is only disclosed after the approval of the Budget. Therefore, Congress has space to update or not the estimates, according to the understanding of the parliamentarians.
Economist Marcos Mendes, researcher at Insper and columnist for Sheet, warned in January of the risk of creating a “gray zone”, with incentives for lawmakers to inflate the correction of the ceiling. He calculates that maintaining inflation at 7.2% avoids cutting R$ 27 billion in fiscal space.
The budget rapporteur also says he believes that Congress and the Executive should seek an agreement so that the rapporteur’s amendments are maintained in the Budget. This instrument is used as a bargaining chip in political negotiations, allowing allied parliamentarians to direct resources to their constituencies.
During the presidential campaign, Lula defended the end of these amendments, used by President Jair Bolsonaro (PL) to broaden the political base in the Chamber and Senate, at the cost of cuts in expenses by the ministries themselves.
Castro, who is an ally of Lula, says that the vast majority of Congress wants to continue to control this slice of public spending – the rapporteur’s amendments are estimated at R$ 19.4 billion next year.
“It will depend a lot on the negotiation between the Executive and the Legislative. Due to Lula’s manifestation, they would be extinguished. Due to the manifestation of the immense majority of congressmen, they would be maintained. Then, the politicians negotiate”, says the senator.
The high value of the rapporteur’s amendments put even more pressure on public accounts and generated wear and tear on the Bolsonaro government, which sent the 2023 Budget proposal with cuts in the social area.
The rapporteur also wants to find a way to restore the budget of these programs, such as Popular Pharmacy. There is also a risk that Casa Verde e Amarela will stop in 2023 if there is no increase in funding for the housing program.
The senator also reiterated the signal that he will seek to increase the readjustment foreseen for public servants in the Executive Branch.
The Budget proposal set aside an amount of R$ 11.6 billion for these increases, enough for a readjustment of approximately 4.85% starting in January — if applied in mid-year, the percentage could be higher.
The Judiciary, in turn, sent a proposal for a readjustment of 18% in two years, which should serve as a reference for the demand of the Legislative’s servants.
“The Legislative and Judiciary civil servants earn a higher salary. Will they have a higher readjustment than those who traditionally earn less? [para servidores do] Executive is only half of what is planned for the Judiciary. Is it just that? I think not. How to make? We will have to study and consider to see what can be done”, says the rapporteur.
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