As spending increases, the government will block BRL 1.7 billion

The Ministry of Planning and Budget (MPO) announced this Monday (22) the need to block R$ 1.7 billion in discretionary spending from the federal budget to comply with the spending cap rule, after a review of spending volume which had an increase in the projection of R $ 24.2 billion. The data is contained in the Bimonthly Report on the Evaluation of Revenues and Expenditures, a document which guides the implementation of the Budget and is published on a bimonthly basis.

“The details of the R$1.7 billion blockade will be detailed on the 30th when the program decree is published [orçamentária]”informed the secretary of the federal budget, Paulo Bijos.

costs

The last few months have seen an increase in expenses, mainly driven by the impact of the new minimum wage, which has risen to R$ 1,320 since May 1, focusing on social security benefits, unemployment insurance, allowances, among others. The file also mentioned R$ 3.9 billion in transfers to states and municipalities from the sanction of the Paulo Gustavo law, which allocated resources to the cultural sector, as well as supplementing the national nursing plan. These blocks can be reversed later with changes in income and expenditure estimates.

These numbers reversed the BRL 13.6 billion spending ceiling breach that was presented in the previous report. The ceiling rule is expected to be replaced by a new tax rule, to be voted on this week in the Chamber of Deputies. The cap would be broken this year, but the Transition PEC, enacted late last year, removed BRL 145 billion from Bolsa Família’s spending limit and up to BRL 23 billion in investments, in case of excess revenue.

The government also increased the estimated primary deficit from BRL 107.6 billion to BRL 136.2 billion, or 1.3 percent of the country’s Gross Domestic Product (GDP, the sum of goods and services produced in the country), according to the ‘edition Evaluation report of income and expenditure for the 2nd two months. The budget target for 2023 remains a primary deficit of 238 billion reais (2.2% of GDP).

Revenue

On the revenue side, the report revised downwards the estimate of items such as the exploitation of natural resources (minus 5.6 billion reais) and the collection of the contribution for the financing of social security (Cofins), with a projection of less than 4.1 billion reais billion. There was also a revision of net collections for the General Social Security System (RGPS), with a projection of a reduction of R$ 4.1 billion and another R$ 3.8 billion less in the projections of collections with tax of import.

On the other hand, an increase in revenues of R$ 5 billion was expected with profits and dividends and R$ 3.1 billion in revenues with the Social Contribution on Net Income (CSLL).

As for the 2023 budget law, the expected increase in revenue is R$105.6 billion, according to the government.