With increased expenses, 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 expenses from the federal Budget to comply with the spending ceiling rule, after a review of the volume of expenses. which had an increase in the projection by R$ 24.2 billion. The data are contained in the Bimonthly Report for the Evaluation of Revenues and Expenses, a document that guides the execution of the Budget and is published every two months.

“The details of the blockade of R$ 1.7 billion will be detailed on the 30th when the (budgetary) programming decree is published”, informed the Federal Budget Secretary, Paulo Bijos.

The last few months have seen an increase in expenses, driven mainly by the impact of the new minimum wage, which has risen to R$1,320 since May 1st, focusing on social security benefits, unemployment insurance, allowances, among others. The folder also cited R$ 3.9 billion in transfers to states and municipalities from the sanction of the Paulo Gustavo Law, which allocated resources to the cultural sector, in addition to complementing the national nursing floor. These blockages may be reversed later with changes in revenue and expense estimates.

These numbers reversed the BRL 13.6 billion break in the spending ceiling that had been presented in the previous report. The ceiling rule should be replaced by a new tax rule, which will be voted this week in the Chamber of Deputies. The ceiling would be broken this year, but the Transition PEC, enacted at the end of last year, removed BRL 145 billion from the Bolsa Família spending limit and up to BRL 23 billion in investments, in case there is excess revenue.

The government also raised the estimated primary deficit from BRL 107.6 billion to BRL 136.2 billion, equivalent to 1.3% of the Gross Domestic Product (GDP, sum of goods and services produced in the country), according to the edition Income and Expenditure Evaluation Report for the 2nd bimester. The fiscal target for 2023 remains a primary deficit of BRL 238 billion (2.2% of GDP).

Revenues

On the revenue side, the report revised downwards the estimate of items such as exploitation of natural resources (less BRL 5.6 billion) and collection of the Contribution for the Financing of Social Security (Cofins), with a projection of less than BRL 4, 1 billion. There was also a review of the net collection 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 collection with import tax.

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

Regarding the 2023 Budget Law, the expected increase in revenue is R$ 105.6 billion, according to the government.

GDP and inflation

The Income and Expenditure Assessment Report for the 2nd bimester increased the GDP growth estimate, in relation to the previous bimester, from 1.61% to 1.91%.

Regarding inflation indicators, the report points out that the Extended National Consumer Price Index (IPCA) will be 5.58%, an increase of 0.27 percentage points in relation to the previous report. The National Consumer Price Index (INPC) was estimated at 5.34%, an increase of 0.18 percentage points in relation to the previous forecast.

The average exchange rate of the dollar against the real was revised to R$5.11, against R$5.20 in the previous two months.