Inflation reduces space for server readjustment to R$1.8 billion, calculates Tax Institution

The government will have only R$ 1.8 billion to adjust federal employees of the Executive Branch, even if it manages to approve the Precatório PEC, due to high inflation and the commitment of resources to social programs and other expenses for the election year.

The estimate is part of the Fiscal Monitoring Report of the IFI (Independent Fiscal Institution), released this Wednesday (17). The PEC changes the calculation of the ceiling and institutes the default in part of the federal court orders. The text has already been approved by the House, but is facing resistance in the Senate.

The Ministry of Economy has been studying for at least three months the possibility of an increase for civil servants, whose salaries are frozen. The fiscal impact was estimated between R$5 billion and R$15 billion at the beginning of the discussions.

According to the IFI, which is linked to the Senate, the PEC should open a space of around R$ 93 billion in the spending ceiling in 2022. Temporary Brazil Aid of R$ 400 will consume R$ 46.9 billion of this total .

Another R$ 21.5 billion is already committed to expenditures such as extension of the payroll tax exemption, readjustment of the constitutional floors of health and education, diesel allowance for truck drivers, social gas allowance, increase in the electoral fund and increase in the ceiling of costs. Autonomous powers and bodies.

There would be R$ 24.5 billion left for the expansion of other expenses, such as salary readjustments for the Executive and amendments by the General Rapporteur on the Budget, says the institution.

But the correction of Budget expenses indexed to the INPC (National Consumer Price Index) should consume R$ 22.7 billion, leaving a space of only R$ 1.8 billion.

This is because the budget proposal’s expenditures were made on the basis of 6.3% inflation. The IFI baseline scenario considers 9.1% in all calculations. Inflation above this level by the end of the year would further increase these expenses, but it would also help to push the ceiling threshold upwards.

This Tuesday (16), President Jair Bolsonaro confirmed that he intends to use part of the fiscal slack in granting salary increases to federal employees.

The secretary of Economic Policy, Adolfo Sachsida, stated this Wednesday (17) that using the budget space of the PEC to readjust salaries will take resources from other public policies.

The leader of the government in the Senate, Fernando Bezerra Coelho (MDB-PE), said that there is no provision for resources to fund a wide salary adjustment, as promised by the president.

The PEC changes the way in which the ceiling is corrected and creates a spending limit for court rulings and precatories. Of the BRL 89.1 billion due next year, BRL 43.7 billion should be paid, according to IFI calculations.

For the entity, the pessimistic scenario outlined by the institution gains strength with the instability caused by the prospect of changing the ceiling rule.

“The fiscal risk increased, and the consequences of this new scenario on the economy could be serious”, says the document signed by Felipe Salto, Daniel Couri and Vilma da Conceição Pinto.

The institution did not change its GDP growth projections, of 4.91% in 2021 and 1.72% in 2022.