Tebet: Education and Health will be out of the budget blockade

The need to block discretionary expenditures in the Federal Budget is to comply with the spending cap rule, after a review in the volume of expenditures which had a projected increase of R$ 24.2 billion, according to 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 JEO (Budget Execution Board) has already met, we closed the issue in relation to that. I can only inform you that the smaller ministries, those with smaller budgets, and Education and Health, will be preserved”, informed Tebet after leaving a meeting with the Minister of Finance, Fernando Haddad.

JEO is made up of the Ministries of Finance, Chief of Staff, Planning and Management. The head of the Ministry of Planning pondered, however, that this blockade is temporary and could be reversed in the coming months. Furthermore, as it will reach portfolios with larger budgets, there is no immediate risk of discontinuing public policies.

“It’s a temporary block, this is accounting. You block it, with the increase in revenue, in the next report you can unblock it. As the largest portfolios, the largest budgets, will not be disturbing the execution, the continuity of public policies”.

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 Chamber of Deputies.

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).

Marco fiscal

Simone Tebet also informed that next Thursday (1st), she and Haddad will participate in a meeting with the party leaders of the Federal Senate, at the invitation of President Rodrigo Pacheco (PSD-MG), to discuss the processing, in the House, of the project complementary law of the new fiscal framework (PLP 93/2023), approved last Wednesday (24) by the Chamber of Deputies.

“I stayed in the Senate for eight years, the House was practically never renewed, two thirds remain senators, a third of those who went to the polls, many of them came back. I have a good relationship with the leaders, with the President of the Senate himself, we have a large bench, which is the MDB bench, which is with us, adds to this economic agenda”, he told the minister about the articulations for the approval of the measure.

The text foresees a set of measures, rules and parameters for conducting the fiscal policy of the Brazilian State, with the control of the country’s expenditures and revenues. The objectives are to guarantee credibility and predictability for the Brazilian economy, as well as for the financing of public services such as health, education and public security. The fiscal framework will replace the spending ceiling rule, in force since 2016, which limited the increase in expenses only to the correction of the inflation of the previous year.

The project for the new fiscal framework may be voted directly on the Senate floor. However, the processing of the PL is still being debated with party leaders in the House. Some parliamentarians ask that the matter be discussed in legislative committees, before proceeding to vote in plenary. The suggestions are for the matter to be analyzed by the Committee on Economic Affairs (CAE) or, even, by the Committee on Constitution, Justice and Citizenship (CCJ), both of the Senate.

Tebet said he sees no problems with the framework going through the CAE beforehand and highlighted that the Senate has the political maturity to analyze the project quickly. “Usually, the projects of the last governments, when they had a financial and budgetary impact, a meeting was held at the CAE even if it was on the same day for the plenary. The Senate is mature, there are fewer parliamentarians, it is easier to talk, dialogue and reach to an agreement”.

Restructuring of ministries

The Minister of Planning was also asked by journalists about possibilities of reversing the restructuring of ministries carried out by parliamentarians. Last Wednesday night (24), the Mixed Commission of the National Congress approved the report by Deputy Isnaldo Bulhões Jr (MDB-AL) on the structure of government, provided for in Provisional Measure 1.154/2023, which deals with the organization of ministries defined by President Luiz Inácio Lula da Silva, in January 2023. The report foresees the withdrawal of several functions from the Environment and Climate Change (MMA) and also from the Ministry of Indigenous Peoples (MPI).

The changes were the target of criticism from ministers Sônia Guajajara (MPI) and Marina Silva (MMA), in addition to various civil society entities. The report, however, will still need to be considered by the full House and Senate.

“It was a report, which was approved, but it is not yet definitive, let’s understand that the plenary will still approve. I know the leader (of the MDB) Isnaldo (Bulhões), he is a man of dialogue, I believe he was, in the his report, as far as he could to transact, talk and approve the text. This does not mean that the text approved in the commission is the text that will definitely be approved in the plenary. It will depend on the political articulation to be made”, opined Tebet.