Government sends 2022 budget to Congress with minimum wage of R$1,169

The federal government sent the Annual Budget Law (LOA) of 2022 to the National Congress this Tuesday (31), the last day of the deadline. The LOA establishes the Union’s budget for the next year and estimates the Executive’s income and expenses.

In the document, the Executive foresees a minimum wage of R$ 1,169 and an increase of 2.51% in the Gross Domestic Product (GDP) in 2022. The value represents an increase of 6.27% in relation to the current floor, of R$ 1,100 .

As expected, the LOA provides R$ 89.1 billion for the payment of court orders and other court rulings next year.

“(The document) contemplates the entire significant increase in court orders. Much of the budget is being devoted to this. While there is no alternative solution, it goes with this full amount”, says the Special Secretary for Finance, Bruno Funchal, at a press conference after the numbers were released.

Regarding the space in the budget for the expansion of Bolsa Família – which the economic team hopes to do with the payment of legal debts in installments – Funchal says that, for now, the document provides for the maintenance of the program as it was this year.

The forecast for gross debt is at 79.8% of GDP. The government expects official inflation, measured by the IPCA, to be 3.50%.

The forecast for the central government’s primary deficit for next year is R$49.6 billion (0.5% of GDP).

“This deficit does not take into account the revenue from the privatization of Eletrobras. So it can be better than that. We were conservative in not including this privatization revenue”, says the secretary, noting that the number is lower than the target of R$ 170.5 billion, established in the LDO 2022.

The document also provides for an increase of BRL 10.7 billion for Health, with BRL 7.1 billion in continuous actions to combat the Covid-19 pandemic, in addition to carrying out the Demographic Census in 2022.

Spending ceiling

The amount foreseen for the Executive’s expenses in the spending ceiling corresponds to R$ 1.54 billion. Value represents an increase of R$ 136.6 billion, destined to social security benefits (R$ 52.7 billion), court decisions including precatories (R$ 33.7 billion), flow control obligations (R$ 19 billion, of which R$ 10.7 billion for public health actions and services), Workers’ Support Fund (R$ 13.5 billion), personnel expenses (R$ 6.6 billion) and other expenses (R$ 5, 7 billion).

The sum presented for the PLOA 2022 totals R$ 62.2 billion, already adjusted for inflation. Added to other court decisions, there is an estimated value of R$ 89.1 billion with the payment of legal obligations in PLOA 2022.

According to the folder, LOA 2022 prioritizes ongoing investments in the Executive Branch, as well as assistance to Brazil assistance. This, however, is at the same level of resources provided for Bolsa Família in 2021.

The proposal sent, which does not include revenues from privatization of state-owned companies, considers the effects of the reform of the Income Tax, with the original text of the Executive, which would have neutrality in the collection. It also takes into account the adjustment of the minimum wage for inflation and the end of compensation to the RGPS in 2021, according to the legislation in force, leaving a residual in 2022 of R$ 3.2 billion, related to the last four months of 2021.

*In update