Economy needs R$ 9 billion to recover underestimated expenses in the 2022 Budget

The economic team presented to Palácio do Planalto a veto request for almost R$9 billion in expenses approved by the National Congress to recompose expenses that were underestimated in the 2022 Budget, according to government sources heard by the Ministry of Health. leaf.

Of this amount, at least R$3 billion must go to personnel expenses, which are mandatory, and almost R$800 million will go to irrigate the electoral fund — which will reach the R$5.7 billion approved by parliamentarians for this year’s campaign.

Another R$ 5 billion was requested to increase the public machine’s costing expenses, which were below the necessary. The most affected is the Ministry of Economy itself, which had a 50% cut in its budget allocations.

The requests were discussed at a meeting on Tuesday (11) between ministers Paulo Guedes (Economy) and Ciro Nogueira (Civil House) and their respective teams.

According to assistants who follow the discussion, the most likely, however, is that the veto ends up being below the R$ 9 billion requested by the Economy.

A new meeting should take place this Thursday (13) to define what will be done. The deadline for sanctioning the 2022 Budget ends on 21 January.

To meet the demand, President Jair Bolsonaro (PL) needs to veto other expenses in the Budget, as it is not possible to simply increase spending, which is limited by the ceiling.

A leaf found that the economic area even suggested that vetoes be applied on amendments by the rapporteur, which total R$ 16.5 billion and are used by Congress to direct resources to electoral strongholds of allies.

However, the orientation of the political wing is not to mess with these resources, which have been used by Bolsonaro to build loyalty to his base in the Legislature. The nomination was given at a time when the president is holding talks on alliances to run for reelection.

The lack of payment of amendments agreed with the Planalto has already triggered a crisis in the first week of the year with one of the base parties, Republicans. Parliamentarians expected to receive R$ 600 million, but the amount was not released by the Economy.

The economic area then presented a kind of plan B of what can be vetoed to recover expenses. The new alternative includes cutting other discretionary expenses, such as funding for ministries and investments.

Like leaf showed, palace assistants and parliamentarians already expected that the clash with the economic team would be reissued with requests for vetoing the budget piece.

The most urgent issues are the recomposition of personnel expenses, which is a mandatory expense (that is, the government cannot fail to honor it), and the payment of resources from the electoral fund.

The Budget set aside R$4.9 billion to fund the parties’ election campaigns in 2022. But in December last year, Congress overrode a veto by Bolsonaro on the subject.

In practice, the parliamentarians’ decision allows the fund to reach R$ 5.7 billion – as originally provided for in the LDO (Budget Guidelines Law). The veto was overturned with the support of the PL, the party Bolsonaro joined last year, and other allied parties.

In the case of personnel expenses, the reduction was made by the rapporteur-general, deputy Hugo Leal (PSD-RJ), who used the space to contemplate other expenses desired by parliamentarians. For the Economy, however, the allocation for salaries and pensions of the federal civil service was below the necessary to cover the entire year.

Behind the scenes in the economic area, technicians know that the margin for vetoes is small, especially with the political decision of the Planalto to shield the rapporteur’s amendments.

Therefore, efforts are focused on recomposing mandatory expenditures, to avoid lack of resources on this front. The expansion of discretionary powers is considered “the battle of the year”.

as showed the leaf, the Ministry of Economy was the most affected by the cuts and may suffer a blackout in its activities in the first half of this year.

Despite the need to recompose discretionary expenses, there is an assessment that the arrangement will need to be made throughout the year. The technicians’ calculation is that the president will hardly be politically willing to assume the attrition with Congress to veto R$9 billion, especially in an election year.

Last year, parliamentarians made up mandatory expenses to boost the rapporteur’s amendments, and the Economy charged the president with a decision that would allow the recomposition of expenses. The R$19.8 billion veto left scars on the relationship between the economic team and the Legislature.

For Juliana Damasceno, senior economist at Tendências Consultoria and associate researcher at FGV Ibre (Brazilian Institute of Economics of Fundação Getulio Vargas), it is noteworthy that, even with an additional space of at least R$ 116 billion in the Budget, the government is still need to reallocate resources to cover lack of money in ministries.

The fiscal slack came with the approval of the PEC (Proposed Amendment to the Constitution) of the Precatórios, which postponed the payment of federal judicial debts against which there is no longer any appeal and also changed the rule for calculating the spending ceiling.

“We still have R$ 16.5 billion in rapporteur amendments, we still have the largest electoral fund in history. [O governo] I could have sat down and asked ‘does this make sense?’, but I didn’t want to give up”, he criticized.

According to Damasceno, the signal that money is lacking even with the expansion of the ceiling may set a precedent for new changes in the fiscal rule, especially at a time when its maintenance or overthrow gains space in the electoral debate.

“A juggling act was carried out to arrange this space. And the electoral agenda was the main priority”, said the economist. She criticizes the fact that the ceiling was expanded without any effort on the part of the government to contain spending, with a review of policies considered inefficient.

“The ceiling no longer fulfills its function. We had the opportunity to review expenses, but instead, two PECs were approved to change the rule and make the path easier”, he said.