Congress takes 50% of Guedes’ budget, and portfolio sees risk of stoppage of activities

Minister Paulo Guedes (Economy) was the portfolio holder of the Jair Bolsonaro (PL) government who saw the most funds shrink during the 2022 Budget.

For the Ministry of Economy team, the R$ 2.5 billion scissor made by Congress could compromise activities in this first semester. Now Guedes’ team is trying to find ways out of the problem.

The scissor is seen by members of the government itself as a retaliation by Congress to Guedes, with whom the Legislature has a turbulent relationship.

In contrast, ministries allied with congressmen or with actions that benefit electoral strongholds —such as Citizenship, Regional Development and Infrastructure—had marginal increases or cuts.

The cut in the economy was 52% in relation to the government’s initial proposal, if the Population Census budget is disregarded – an extraordinary expense of the economy shielded by a decision of the STF (Supreme Federal Court).

Even if the survey entered the account, however, the portfolio would continue to be the most affected, with a reduction of 34%.

The mood in the economic team is one of dissatisfaction with the general rapporteur for the Budget, deputy Hugo Leal (PSD-RJ).

Reports heard by leaf claim that he has “dropped the ball” and that the government will have to right what are considered huge mistakes. The deputy was contacted, but did not respond to questions.

The ministry is still doing a detailed survey on the impact of the cut and from which month the programs of the folder will be harmed. The diagnosis so far is that activities may be compromised due to lack of resources as of May if nothing is done.

With the exception of the Census budget —destined to IBGE, the Brazilian Institute of Geography and Statistics—, the cut of just over 50% affected all budget units of the Ministry of Economy.

The Federal Revenue, for example, saw resources decrease from R$ 2.1 billion to R$ 1 billion, which directly affects the agency’s ability to keep systems in operation. The tax authorities take care of the federal collection and a series of sensitive inspections for the government.

The cuts in the Revenue and the lack of funds for the regulation of an efficiency bonus triggered a national movement among auditors to hand over positions and the plan to stop activities.

Internally, one of the strongest warnings comes from the PGFN (Attorney General’s Office of the National Treasury) — the legal body responsible for, among other things, collecting debtors from the Union.

The PGFN warns that the lack of resources can paralyze activities and cause tax credits to which the Union is entitled to prescribe. In addition, it can boost the volume of precatories to be paid by the public coffers.

The agency had asked the government for a budget of BRL 504 million for activities in 2022, but only BRL 430 million was granted in the text sent to Congress. Later, congressmen reduced the amount even further, to R$208 million – a 51% cut from the original.

For the PGFN, if the 2022 Budget is not revised, there is a risk of interruption of information technology services as of May.

As of June, maintenance contracts, collection procedures, certificates and administrative routines may be suspended.

Other areas, however, are also struggling. The budget for controlling the public budget was also compromised.

The drastic cut in appropriations for the Economy further soured the atmosphere between Guedes’ portfolio and Congress, whose relationship is marked by rows.

The 2021 Budget, for example, had already been the scene of a war because of excessive cuts in mandatory expenses such as social security benefits. Guedes blamed Congress for the makeup, and parliamentarians reacted by widening the economy’s supposed endorsement of the changes.

The fight left a scar in the relationship, deepened by disagreements over the direction of tax and administrative reforms and the change in the spending ceiling — a fiscal rule that limits the advance of expenses to inflation and that ended up being relaxed.

Given the scenario, the economic team has studied alternatives to restore at least part of the values.

Government officials consulted by the leaf talk about the possibility of Bolsonaro vetoing changes made by Congress, with the aim of restoring the minimum values ​​necessary for the portfolio.

Sought, the Ministry of Economy said that it will not comment on topics related to the 2022 Budget before the sanction by President Bolsonaro.

If on the one hand Guedes’ portfolio was in penury, allied ministers had their budgets preserved.

Citizenship (led by João Roma, affiliated with the Republican center party) has already had its spending boosted by Auxílio Brasil —a substitute for Bolsa Família (a line considered mandatory in the Budget)—, and received another R$2 billion in discretionary expenses. This was the ministry most benefited by parliamentarians.

The Ministry of Labor and Welfare, of Onyx Lorenzoni, in turn, received an increase of R$ 1.1 billion.

Folders that usually receive attention from parliamentarians, as they house works and other investments, were benefited or practically spared.

The Ministry of Infrastructure, under Tarcísio de Freitas, received an increase of R$ 817.5 million, while Regional Development, under Rogério Marinho, had a relatively low cut of R$ 171 million.

The values ​​still do not consider the so-called rapporteur’s amendments, an instrument used to distribute resources to parliamentarians allied with the government, who can contemplate their electoral bases. In general, MDR is often one of the main beneficiaries of this mechanism.