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Extra credits and falling deficit: how Brazil intends to close its …

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Extra credits and falling deficit: how Brazil intends to close its ...

Last Tuesday, 15, the Federal Senate approved a bill on the distribution of revenue from the pre-salt megaleillion, scheduled for the next day 6. Of the $ 106.5 billion that the government expects to raise, R $ 10.9 billion will go to the states and another $ 10.9 billion will go to the municipalities, while Petrobras will receive $ 33.6 billion for the revision of the onerous assignment agreement.

In addition to representing a certain relief to the Union accounts, the approval of the project, unanimously, opens the way for the second round vote, on the 22nd of the Social Security Reform, the government's big bet to recover the economy.

Expectations about a new economic scenario after this approval was enough to brighten the market yesterday morning, with Ibovespa Futuro opening slightly higher despite political uncertainty linked to the crisis between President Jair Bolsonaro and his party, the PSL, whose leadership in the House was claimed by Deputy Eduardo Bolsonaro, his son, last night.

Amid promises of more cash, the government sent this week alone 18 requests for credits for actions already planned in the Budget and also for new acts, totaling $ 41 billion, including the amount to be paid to Petrobras. The resources in question should come precisely from the collection of megaleillion, responsible for a new wave of optimism in the Ministry of Economy.

R $ 80 billion deficit?

Despite the alarming unemployment rates, criticism of contingencies, the forecast of 0.9% GDP growth and other not very encouraging indicators, the Minister of Economy, Paulo Guedes, has tried to maintain a certain optimism about the possible resumption of the fiscal balance that, in theory, would make the country able to grow significantly again.

Concrete proof of this optimism was the bet that the Bolsonaro government would be able to clear the public deficit as early as 2019, after five straight years of red bills. That would be possible, he said, if the Union got all the revenue from the megalillion of surplus oil from the onerous assignment. But, due to the agreement made with Congress, this should not happen this year.

Still, today, Guedes believes it will be possible to close the year with a deficit of $ 80 billion, below the approved fiscal target of $ 139 billion. That's because, according to news published In the blog of Valdo Cruz, in G1, the minister expects that at least $ 20 billion will reach the coffers of the National Treasury. Without this amount, the expected gap would be $ 100 billion, also below the fiscal target.

Will the government be able to clear the deficit in the medium term?

Maria Beatriz de Albuquerque David, professor at the Faculty of Economic Sciences (FCE) of the State University of Rio de Janeiro and executive coordinator of the Center for Development Strategy Studies (CEDES), believes that, just as the government will not succeed To clear the public deficit this year, the same should not happen in 2020.

In an interview with Sputnik Brazil, the expert explains that, given the large volume of compulsory expenses – which should reach 94% of federal government spending next year -, the government's great alternative would be to try to decouple spending, which It would require more than well-articulated congressional support, as it directly affects the interests of "states, municipalities, corporations, and the population as a whole."

According to her, the idea that was sold is that the Social Security Reform would be able to "solve all that, which is not true either."

"It (the reform) will reduce spending on Social Security, but over a long period of ten years, which will not clear everything either. Because there are many companies that owe Social Security and do not pay and there has to be a collection effort very high too, and nothing is being done in that area, "he says.

For the economist, the big advantage for the economy at the moment, the megaleillion of the burdensome assignment, is neither a merit of the efforts made by the current administration, but rather a "legacy of the Lula government", since the surplus to be sold in November It results from the fact that the pre-salt area has a potential greater than the 5 billion barrels that Petrobras gained the right to exploit and from the agreement signed between the company and the PT government in 2010.

"It was an advantage of Lula and a mistake of Lula. It has nothing to do with this government. But it is he who will be the winner of this, because the money will come in now," says the academic, noting that if companies If they had begun to exploit this oil a few years ago, perhaps they had already paid the Union high amounts in taxes, increasing cash.

Albuquerque believes the Bolsonaro government has been trying to free up as much money as possible to spend as much as it wants, with greater flexibility, using mainly contingencies. In the absence of a clearer strategy to increase revenue and "until mandatory spending changes", this should remain the economic team's main weapon.

"In fact, you (the government) are saying, 'I am the budget maker, not the congress'," summarizes the expert. "The Ceiling of Spending ties the situation even further. But moving the Ceiling of Spending today, for a government that says it is serving the market, would fall very badly. Now, the Ceiling, really, what did the (Michel) To fear was to completely bind the next governments. And to topple the Ceiling would be, for free market forces, a very bad signal. So much so that he tried to do so and backed off. "

Extra credits, cuts and salaries without real increase in 2020

Among budget estimates for next year, the government believes it will need $ 367 billion in extra credit to finance public spending, according to the bill presented in late August. In the last Annual Budget Bill (PLOA), this credit was R $ 248 billion.

Although the 2020 Budget is still pending in parliament, the Budget Guidelines Law (LDO), passed last week, gives some important clues as to what to expect next year in terms of investments and savings. One of the most controversial points is the minimum wage, which should no longer have a real increase.

Since Luiz Inácio Lula da Silva's first administration, the minimum had been readjusted based on inflation calculated by the Extended Consumer Price Index (IPCA) and the Gross Domestic Product (GDP) of the previous two years, which allowed real increases. in case of growth. If confirmed the current proposal, the readjustment will be based only on the National Consumer Price Index (INPC), which, in practice, freezes wages, according to critics.

In support of the proposal, government allies say the measure is necessary to reduce the cost of the state and attract private sector investment. However, opponents argue that this will make workers poorer and still take billions out of circulation next year, as 2018 had a positive change in GDP.

In addition to the wage policy, they must also suffer cuts, wake up with the bill sent by the government to Congress, Education, Health, Defense, Tourism, Infrastructure, Human Rights, Mines and Energy, Environment, Regional Development, Citizenship, Agriculture, Justice, Foreign Affairs, Comptroller General of the Union, Economy, Presidency and Vice Presidency.

Taking into account the Expenditure Ceiling, the budget foreseen for next year is approximately R $ 1.454 trillion, 3.37% higher than approved for 2019.

. (tagsToTranslate) economic management in the Bolsonaro government (t) Brazilian economy data (t) Brazil's deficit in 2019 (t) economic growth


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