Economy

Bolsonaro's administration and government leaders in Congress agree to revise Budget 2021

Full of inconsistencies, the document has been called a "piece of fiction" by economists and even government technicians

The Brazilian minister of Economy Paulo Guedes
Pro-market platform of minister of economy, Paulo Guedes, generated optimism among investors, but growth frustrated high hopes. Photo: Fabio Rodrigues/ABr
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  • Technicians in the economic area believe that assumptions related to estimated expenses, such as Social Security expenses, must be mandatorily revised to be within legal standards and within fiscal responsibility;
  • Expenditures with Social Security this year are in the order of BRL 700 billion, but in the Budget they were underestimated to BRL 670 billion, and this difference was used to contemplate parliamentary amendments, according to the source;
  • According to the approved budget, the value of parliamentary amendments would reach BRL 31.5 billion, but, after meetings in the last days, a reduction to BRL 16.5 billion was agreed.

Brazil‘s federal government’s economic area and leaders in Congress reached a consensus on the need for changes to the country’s 2021 Budget. A source told Reuters that a review of spending assumptions and a reduction in half of the parliamentary amendments should be made. The proposal was approved by Congress on March 25, three months later than usual, and on the eve of the start of the discussion on the Budget of 2022 – the federal government usually sends the document’s draft for the following year until April 15 of each year.

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However, negotiations on adjustments are expected to last a few more days, and “only with luck” the necessary changes would be completed by the end of next week, according to the source, who requested anonymity. The budget approved by Congress has legal inconsistencies that make it unfeasible, illegal, and unenforceable, the source said. In general, the proposal underestimates mandatory and Social Security spending, increasing the appropriations for expenses provided for in parliamentary amendments to BRL 31.5 billion.

This volume of funds for parliamentary amendments has a simple reason: the governability of Jair Bolsonaro‘s administration, which is increasingly pressured by the poor conduct of the fight against the coronavirus pandemic.

According to the source, the agreement has the support of the presidents of the Lower House of Representatives, Arthur Lira (PP-AL), and the Senate, Rodrigo Pacheco (DEM-MG), as well as Minister Luiz Eduardo Ramos, of the Civil House. “The leaders are closed on this idea. Lira, Pacheco, and Ramos already know what is agreed, ” the source said.

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Technicians in the economic area believe that assumptions related to estimated expenses, such as Social Security expenses, must be mandatorily revised to be within legal standards and within fiscal responsibility.

Expenditures with Social Security this year are in the order of BRL 700 billion, but in the Budget they were underestimated to BRL 670 billion, and this difference was used to contemplate parliamentary amendments, according to the source. According to the approved budget, the value of parliamentary amendments would reach BRL 31.5 billion, but, after meetings in the last days, a reduction to BRL 16.5 billion was agreed.

On speculations regarding a possible departure of Minister Paulo Guedes from the Ministry of Economy after the impasse with the Budget, the source said he considered it to be just rumors.