Government studies reducing investments in health and education

Economist and professor at the Faculty of Commerce of São Paulo Rodrigo Simões explains that the constitutional floors were established to guarantee a minimum investment in essential areas. According to him, the flexibility proposal seeks to reduce these percentages to try to control public spending, since the country no longer has room for the budget.

“Today we face a challenge, which is what? Our constitution, with its minimum investment percentages, for example, in health and education, today no longer fits into the Brazilian public budget. So that’s why they want to try to insure these floors to see if there’s a little more money left to invest in other areas”, he explains.

A report released by the National Treasury at the beginning of the year estimated the release of up to R$131 billion for other funding and investment expenses by 2033 with the flexibility of health and education floors. In the opinion of economist Rodrigo Simões, the measure needs to be taken.

“If the government does not seek to close the budget in a way that allows it to fulfill the budget it promised, this will only generate more debt in the public sector, which consequently generates more debt payments”, he analyzes.

Currently, the Constitution provides for 15% of Net Current Revenue (RCL) for the health floor and 18% of Net Tax Revenue (RLI) for education.

Government needs to save

Federal government projections, according to data released by the Chamber of Deputies, show that the floors in the two areas will total R$336.3 billion in 2025 and consume 44% of the budget available for all non-mandatory expenses. The percentage will rise to 51% in 2026, 63% in 2027 and 112% in 2028, when R$12 billion would be missing for funding and investments in other areas.

According to economist and professor at the Faculty of Commerce of São Paulo Rodrigo Simões, Brazil needs and lacks investments capable of generating more jobs in regions such as the Northeast and North, which are the most needy in the country today.

“And then where would these 130 billion go? They would go to infrastructure, they would go to investment in innovation and technology, regional development, strengthening public security, stimulating the quality of employment and professional training”, he highlights.

Economist Newton Marques believes that the government needs to restructure public accounts and spending, worrying about what is really needed.

“The government is concerned about the criticisms it is making in relation to what it will not be able to fulfill, what it has promised, the zero deficit, because revenues have not grown as much as was expected and expenses increasingly exist and still the need, due to the coalition government, to spend”, he points out.

Recently, the Minister of Finance, Fernando Haddad, said that he intends to study alternatives.

“There are several scenarios that are being discussed by the technical areas, but none have yet been brought to the president’s consideration. When discussing the budget, we will take some proposals to the president, who may or may not accept it, depending on his assessment”, he assesses.