The possibility of an overflow in the spending ceiling made the government contingency (block) another R$ 6.739 billion of non-mandatory spending from the General Budget of the Union for 2022, announced this evening (22) the Ministry of Economy. According to the ministry, the decision is necessary because the forecast of mandatory spending by the Union has increased compared to the previous forecast, released in May.
The blocking of funds is included in the Bimonthly Report on the Evaluation of Income and Expenses, sent this Friday night to the National Congress. Published every two months, the document guides the execution of the Budget. The distribution of cuts by the organs of the Federal Executive Branch will be disclosed in a presidential decree to be published by the end of the month.
According to the report, the need for total blocking of the 2022 Budget rose from BRL 9.96 billion in the second quarter to BRL 12.736 billion in the third quarter. As the government still had BRL 5.997 billion blocked, the value of the new block was BRL 6.739 billion defined in the report.
The amount is lower than the amount reported earlier today by President Jair Bolsonaro. During a visit to a gas station in the morning, the president had said that the contingency could reach R$ 8 billion.
Expenses
The projection for primary expenditures in 2022 increased by BRL 45.819 billion, expected to close the year at BRL 1.834 trillion. The estimate for mandatory spending rose to R$ 1.679 trillion, R$ 46.746 billion higher than projected in May. However, the forecast of discretionary (non-mandatory) spending by the Executive Branch was reduced by R$ 927 million, to R$ 154.246 billion. This resulted in a total variation of R$ 45.819 billion.
The details of what types of mandatory spending had the forecast increased will only be released at a press conference on Monday (25). The Special Secretariat for the Treasury and Budget of the Ministry of Economy reported that the new figures incorporate the overthrow of the veto of the Paulo Gustavo Law, which provides for cultural incentives totaling R$ 3.86 billion, and the approval of the minimum wage for community agents. of health, which will have an impact of R$ 2.24 billion.
primary deficit
The impact on public accounts will only be greater because, according to the Ministry of Economy, gross revenue forecasts jumped R$ 59.014 billion, even with the exemptions granted on fuels and industrialized products.
When discounting transfers to states and municipalities, the estimate of net revenues increased by R$ 51.955 billion. As revenues will increase at a faster pace than expenditures, the report reduced the primary deficit estimate for this year from R$65.490 billion to R$59.354 billion.
The projection for the primary deficit, informed the Ministry of Economy, incorporates the approval of the constitutional amendment that increases social benefits and creates aid for taxi drivers and truck drivers. The change has an impact of R$ 41.25 billion until the end of the year, but these expenses were not affected by the contingency because they are outside the spending ceiling.
The estimate also includes the exemption of R$ 16.51 billion determined by the complementary law that zeroed federal taxes on gasoline and ethanol. Until the end of the year, these fuels will not pay the Contribution for Intervention in the Economic Domain (Cide), the Social Integration Program (PIS) and the Contribution for the Financing of Social Security (Cofins), in the same way as diesel effective since March of this year.
The primary deficit represents the negative result of government accounts before the payment of interest on the public debt. Official estimates are much more optimistic than the amount approved in the 2022 Budget Guidelines Law, which stipulates a primary deficit target of BRL 170.474 billion for the Central Government (National Treasury, Social Security and Central Bank).
total block
At the end of March, the government had allocated R$ 1.722 billion in rapporteur amendments . In May, the economic team initially released a blockage of BRL 8.239 billion, but the value was later reduced to R$ 6.965 billion. From May to now, part of the funds was released, but the government had to make a new contingency in order not to breach the spending ceiling, resulting in the total blockage of R$ 12.736 billion.
Every two months, the Ministry of Economy publishes the Income and Expenditure Assessment Report, a document that guides the execution of the Budget. Based on forecasts of economic growth, inflation and the behavior of revenues and expenditures, the economic team determines the necessary blockade to meet the primary deficit targets (negative result of government accounts without public debt interest) and the spending ceiling.
On the 14th, the Economic Policy Secretariat of the Ministry of Economy had released the estimates used in preparing the report. The growth forecast for the Gross Domestic Product (GDP, sum of produced wealth) increased from 1.5% to 2%. The official inflation estimate dropped from 7.9% to 7.2%.
