Drilling a ceiling in 2023 is inevitable, but the rule should come back later, says Meirelles

Former Finance Minister and former head of the Central Bank Henrique Meirelles defended foreign investors this Wednesday (16) that creating an exception in the spending ceiling for next year “maybe it is inevitable due to the political campaign”, but the rule should come back into effect the following year.

This Wednesday, the vice president-elect, Geraldo Alckmin (PSB), presented the draft of the PEC (proposed amendment to the Constitution) of the Transition, which proposes to remove the Bolsa Família program from the reach of the spending ceiling permanently.

Meirelles, who was Michel Temer’s (MDB) minister and supported the PT candidate this year, said this Wednesday that “you can create the waiver [licença para gastar] in 2023, but then cut all unnecessary spending and come back with a spending anchor in 2024”.

Asked specifically about Bolsa Família, he said that “we shouldn’t simply exclude spending from the ceiling for years.” “The main purpose of the spending cap is to define priorities,” said the former minister at a Bradesco BBI event held in New York.

The PEC presented does not set a maximum value for the extract bill, but estimates by Lula’s team indicate the need for R$ 175 billion for the social program next year.

The amount includes BRL 157 billion to ensure the continuity of the minimum benefit of BRL 600 and BRL 18 billion to finance the additional installment of BRL 150 per child up to six years old. The text also does not stipulate an expiration date for the measure, which leaves the door open for it to be permanent.

Just considering the withdrawal of Bolsa Família from the spending ceiling, the government’s primary deficit next year could exceed R$ 235 billion. This amount is funded by public debt, which is financed by the collection (obtained mainly from taxes paid by society).

Meirelles stated that the idea of ​​the ceiling is to force the cut of unnecessary expenses, and mentioned the need to close state companies that have lost their function, such as EPL (Empresa de Planning and Logistics), a company that would structure the bullet train that would connect Rio to São Paulo —which never got off the ground.

Meirelles defended his adhesion to Lula’s campaign and said that the government starts in a better situation than in 2003, due to the size of the external debt and the lack of foreign reserves, and praised the austere policies and fiscal responsibility of the PT, especially in the first mandate.

The former minister stated that he hopes that Lula’s economic team “do what is right and what worked before”. “I believe that the most effective social policy that exists is job creation,” he said.