This Tuesday, in extraordinary session, the Chamber of Senators will discuss the PGN 2023.
Between 2002 and 2003, Paraguay had been in economic stagnation for 20 years, poverty reached almost 50%, and the State was practically in a state of insolvency due to the inability to pay its bills. In 2003 he assumed the new Government and an agreement was signed between the Executive, Legislative and the business sector in order to promote a series of reforms, which included the reduction of tax rates and the improvement of Public Administration expenses.
The first part was fulfilled, but not the second. The tax reform made it possible to allocate more than US$ 2,000 million a year from additional income to salary expenses in the last 20 years. Tax revenues have multiplied 8 times since 2003 and public spending grew in the same proportion. However, citizens have not received better health, better education, better security or infrastructure, since a large part of the increase in these incomes went to salary expenses.
Citizens must learn more about this situation and act to change it. The contribution of Development in Democracy (DENDE) to this purpose is the creation of a Public Expenditure Analysis Unit that will provide citizens with timely and reliable information on the use of public money. During Plaza Pública DENDE, the economist and former Minister of Finance, César Barreto, and the economist and former Vice Minister of Economy, Manuel Alarcón, explained the objective of this new Unit, under the thematic context “Waste in Public Expenditure and the need for a informed and demanding citizens”, moderated by Yan Speranza.
César Barreto recalled that the 2003 reform, together with the appointment of technicians at the head of the Ministry of Finance, made it possible for the country, throughout these years, to maintain order in the macroeconomy, a controlled public debt and it was even possible to use the margin of indebtedness that the country had to face a very strong shock like the pandemic.
On the other hand, he regretted that the political class has not accompanied the reforms and, on the contrary, has continued to manage state resources with non-technical criteria. “I think we have failed, because the levels of public spending in terms of amounts have grown a lot, however, the use of these resources leaves much to be desired,” he added.
Although the 2003 reform gave good results, in 2012 the Legislative Branch granted a salary increase for the public sector that marked the beginning of a period of fiscal deficit that to date cannot be reversed. This decision caused the growth of salary expenses of US$ 800 million per year, without resulting in greater benefits for citizens.
He stressed that the remuneration of the public sector cannot be detached from the economy in general, because ultimately those who end up paying those remunerations are the taxpayers.
CONTEXT
On November 10, the Chamber of Deputies gave its general approval to the National General Budget Bill (PGN) for Fiscal Year 2023.
The legislators ended up approving the work carried out by the Bicameral Budget Commission (CBP). However, this represents more salary increases, contract staff and similar expenses.
With this approval, the PGN was G. 105.30 trillion (US$ 14,706 million). What was requested by the Executive, through the Treasury, was G. 105.18 billion (US$ 14,690 million).
This increase in rigid expenses will represent an increase of 1,300 new positions, mainly in universities, in the Prosecutor’s Office and the Supreme Court of Justice.
The difference between what was proposed by the Treasury and what was approved by the bicameral is US$ 17 million (around G. 120 billion).
