posted on 08/31/2021 05:55 AM / updated on 08/31/2021 05:56 AM
(credit: Fabio Rodrigues Pozzebom/Agência Brasil)
The 2022 Annual Budget Bill (PLOA) will be sent to Congress today. Amid fierce discussions between the Executive, Legislative and Judiciary, the market’s expectation is that the text will be less political and contemplate four main points: payment of R$ 89 billion in court orders; compressed discretionary expenses; revised mandatory expenses; and the amount reserved for the new Bolsa Família at the 2020 levels (approximately R$35 billion), without expanding the value and base of beneficiaries. In practice, however, few believe that what will be written will be fulfilled, given the trend of expanding spending by the government, which intends to boost the Bolsa Família
“The Executive will only ‘fulfill the schedule’ (constitutional deadline) by delivering the PLOA 2022. The doubts and uncertainties will continue. The government intends to make an omelet, but it doesn’t have eggs”, says specialist in public accounts Gil Castello Branco, secretary general of Associação Contas Abertas. The strategy of publishing a fictional piece is evident, he says, in the official speech, by the pretensions of launching a robust social program, of readjusting civil servants’ salaries, of extending the payroll exemption and of including billions in the Electoral Fund.
But there is no room in the spending ceiling. “This Tuesday, the government will just kick off a complicated game, which will be played over the next four months. And everything will depend on the combination with the ‘Russians’, that is, with the National Congress”, says the specialist ironically. He recalls that there is still no solution for precatório. “Furthermore, the parameters of the Budget Guidelines Law (LDO, released on August 23) are already outdated in relation to the forecasts of the Focus Bulletin, by the Central Bank. The market is, every week, more pessimistic”, he points out.
“What is expected is that it will reduce expenses. When will the cut in subsidies that you promised in subsidies come forward in September? Would it not be feasible, in this crisis scenario, to reduce parliamentary amendments, notably in the amount of around R$ 17 billion (in 2021) of the abominable amendments made by the rapporteur? Faced with so many uncertainties, the PLOA should contain, once again, an extremely high value in the ‘conditional expenses’, which depend on the authorization of the Congress”, reinforces Castello Branco.
Rachel de Sá, head of economics at Rico Investimentos, points out that “the market is on hold and awaiting the Fux-Dantas resolution” — which has been lined up between the president of the STF and CNJ, Luiz Fux, and minister Bruno Dantas, from the STJ, which also involves the presidents of the Chamber, Arthur Lira, and of the Senate, Rodrigo Pacheco — to resolve the issue of payment of court orders and define budget space for the new Bolsa Família. Resolution, however, that has no date to happen.
“But the market is waiting for the solution of the court orders. We don’t believe the government will break the ceiling by the end of the year. Of course, the great thing, in terms of settling the accounts, is gone. But between the great and the apocalypse, there is space. And for Bolsa Família, by law, it is necessary to find a permanent source of funds”, says Rachel. To this end, the Executive counts on the improvement in tax collection, which has been growing in recent months, despite the persistent rise in inflation, especially in food and fuel, argues the economist.
In order to close the account, says Rachel de Sá, the government will have to resort to the “mathematics of almost zero discretionary” strategy – discretionary expenses are those that the government is free to decide when and if it will pay, as opposed to mandatory expenses. , which is required to pay. “Of course, as a result, investments fall. What is also discussed are subsidies and parliamentary amendments. But the government has little room for maneuver, which could lead to possible resource constraints in the future”, highlights Rachel.
She admits that “a part of the PLDO doesn’t reflect what’s going to happen.” “This budget piece will be just a preview”, he says. For Cesar Bergo, partner-investor at Corretora OpenInvest, Just the fact that the government said it was going to default on court orders has already created instability in the market. “We obviously expect seriousness in the budget, but if we are going to measure it by what happened last year, it will be difficult”. There are questions, he says. “Especially in issues related to the pandemic and emergency and assistance assistance. There are many doubts”, says Bergo.