Government fears lack of money for INSS and outlines emergency plan

The blocking of resources in the 2022 Budget left the Jair Bolsonaro government (PL) with only R$ 2.4 billion to fund discretionary spending by all ministries in the last month of the year. There is a real fear of lack of money even for mandatory expenses, such as pensions, which led the Executive to draw up an emergency plan.

The Chief Minister of the Civil House, Ciro Nogueira, sent a query to the TCU (Tribunal de Contas da União) on the possibility of using extraordinary credit, outside the spending ceiling, to cover a portion of the expenses of the INSS (National Insurance Institute). Social).

The thesis is that these expenses grew a lot after the acceleration of analysis of applications and the reduction of the waiting list, leaving the government with no room for maneuver in the Budget in the last months of the year. The hole in mandatory expenses is estimated at R$ 22.3 billion, of which 70% correspond to Social Security.

The consultation, revealed by Valor Econômico newspaper and confirmed by Sheet, was formalized by the Civil House with the support of the Ministry of Economy, which issued a series of opinions to substantiate the issue. One of the letters is signed by Minister Paulo Guedes himself.

The setting is considered extremely serious and dramatic. Without a solution, the prospect is that the news of bodies suspending activities will grow, in a true blackout of the federal public machine.

The government itself is struggling to hold back the blockade, which reached R$15.4 billion on November 22, after it was found that INSS expenses had risen again.

In addition, the Economy has no room for maneuver to accommodate an extra need of another R$ 15.4 billion to pay INSS benefits. The solution would be to cut once and for all the appropriations for the rapporteur’s amendments (today only blocked), but this would require prior approval from Congress.

“To date, there has been no signal (positive or negative) from the General Rapporteur of the LOA [Lei Orçamentária Anual] 2022 so that mandatory expenses could be supplemented with resources from PR programs 9 [emendas de relator]🇧🇷 This situation has been worrying the technical areas of the Ministries of Economy and Labor and Social Security, due to the fact that there is not enough time in this year to supplement mandatory expenses”, warns a letter signed by members of the Federal Budget Secretariat.

The Executive has forwarded a bill to authorize the relocation without this prior approval, but there is a great risk that the vote will not take place in time to adjust the Budget schedules.

The climate is one of insecurity. The release of funds and the effective payment of expenses depend on acts signed by technicians and managers, who respond with their own CPF if any irregularity is found in relation to tax rules. Violation of the spending ceiling could be included in this category, as well as non-payment of an expense that, as the name implies, is mandatory.

An extraordinary credit that does not meet the constitutional requirements of unpredictability and urgency could also be judged as an irregularity, hence the consultation with the TCU.

The Civil House alleges that the 2022 financial year presents an “atypical situation” and questions whether the “unpredictable and extraordinary growth in mandatory expenditure, combined with the absence of legal instruments adequate to the demand for additional credit due to time restrictions” would be sufficient motivation to opening of extraordinary credit.

Ciro Nogueira’s electronic signature was registered at 12:27 am on December 1st, and the protocol at the TCU was made at 1:02 am —evidencing the urgency with which the issue has been handled by the government.

The situation is so dramatic that the government sees the risk of Social Security spending becoming even greater in the middle of the month, when the Ministry of Labor and Social Security processes the December payroll. Any effort to “shake the coffer” in other ministries would be insufficient to solve the problem.

If the court gives the green light to pay retirements with extraordinary credit, the government’s intention is to carry out a careful analysis of the amount that will actually be needed – which tends to be below R$ 22.3 billion. The caution takes into account the assessment that abusing any precedent set by the TCU could be a shot in the foot.

On the other hand, even if the court gives the green light to the consultation, there are doubts whether the technicians who make these payments will agree to sign the extraordinary credit, since the jurisprudence of the court of accounts is subject to change until the actual judgment of the accounts. The fear behind the scenes is being exposed to some kind of accountability.

Therefore, the Executive is also looking for other solutions. The government even consulted the STF (Federal Supreme Court) on Tuesday (29) about the possibility of using extraordinary credit to fund the transfer of R$ 3.9 billion to the cultural sector, provided for in the Paulo Gustavo law, but this door was closed by the Court.

Another way out is to approve a bill that makes some devices in the Budget more flexible to deduct expenses from the spending ceiling and reduce the transfer of the Paulo Gustavo law in 2022.

Predicting an extra space for 2022 in the PEC (proposed amendment to the Constitution) of the Transition, sponsored by the elected government of Luiz Inácio Lula da Silva (PT), would be the “safer” option. However, interlocutors from the Ministry of Economy are not authorized to get involved in these articulations, which have been conducted only by parliamentarians.

Congressmen have a strong interest in making room in the Budget to release R$ 7.7 billion in rapporteur amendments that are currently blocked. These funds are used to irrigate electoral reducers of the contemplated and serve as a bargaining chip in political negotiations with the Planalto Palace.

But the inclusion of expenses for 2022 in the Transition PEC can also help the ministries, which arrived in December with only R$ 2.4 billion in funds effectively available to fund contracts, purchase of material and works in progress in the final stretch of the year.

Of the allocation of R$ 99.3 billion for discretionary expenses this year, R$ 89.5 billion had already been committed (first phase of spending, when there is a commitment to the acquisition of the good or service) on November 30 and another R$ $7.4 billion is blocked.

The Ministry of Education, for example, had only R$466 million available until the end of the year. In Health, this value is R$ 374.6 million. These are tiny values ​​for the size of the policies carried out by these departments.

There are also isolated cases of some ministries that have suffered blockages greater than the amount available on the date of the decree, leaving a kind of “balance to be blocked”. If the situation is not resolved, it is possible that these bodies need to cancel expenses that had already been committed.