Budget block affects resources of six ministries

The government made the blockade to comply with the spending ceiling rule, after noting an increase of R$ 24.2 billion in projected expenses this year, according to the Bimonthly Report for the Evaluation of Revenues and Expenses, which guides the execution of the Budget every two months. In total, the blockage is approximately R$ 1.7 billion.

The Ministry of Cities had R$ 691.2 million of funds blocked; Transport, R$ 602.1 million; Development and Social Assistance, Family and Fight against Hunger, R$ 118.2 million; Integration and Regional Development, R$96.1 million; Farm, R$93.2 million; and Planning, R$88.4 million.

The blockade is temporary and may be reversed in the coming months, based on the entry of more revenue into the government’s cash register. Discretionary expenses were blocked, when payment is not mandatory.

On Monday (29), the Minister of Planning and Budget, Simone Tebet, anticipated that the Ministries of Education and Health and smaller portfolios would be preserved of blocking. One of the reasons is to avoid the risk of discontinuing public policies.

increase in expenses

According to the latest revenue and expenditure assessment report, 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, affecting social security benefits, insurance unemployment, allowance, among others.

There were also 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 Federal Senate.

The ceiling would break 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).