The economic team will officially announce, this Monday (22), the freezing of R$15 billion in the 2024 Budget. The suspension of the amounts will be included in the Revenue and Expenditure Assessment Report, to be sent to the National Congress on Monday afternoon.
Last Thursday (18), the Minister of Finance, Fernando Haddad, anticipated the announcement of the freeze, amid the surge in the dollar on the eve of the report’s submission. Of the R$15 billion to be suspended, R$11.2 billion will be blocked; and R$3.8 billion will be contingent.
Both contingency and freeze represent temporary spending cuts. The new fiscal framework, however, has established different motivations. A freeze occurs when government spending grows more than the limit of 70% of revenue growth above inflation. A contingency occurs when there is a lack of revenue that compromises compliance with the primary result target (result of government accounts without interest on public debt).
The distribution of the cuts among the ministries will only be announced at the end of the month, when a presidential decree is published with the spending limits for each ministry. According to the legislation, the details of the freeze must be published within ten days after the report is sent to Congress.
In March, the government had blocked R$2.9 billion in discretionary (non-mandatory) spending from the Budget. The blockade was necessary to ensure compliance with the spending limit of the fiscal framework.
With the approval of the law that resumed the collection of the Mandatory Insurance for the Protection of Victims of Traffic Accidents (DPVAT), the government had released the R$ 2.9 billion in May. This occurred because the law contained a “rider” that released R$15.8 billion from the spending cap. The release of the money was provided for in the fiscal framework if revenue grew above the forecast. In politics, the term “rider” means the insertion, in a legislative proposal, of a subject unrelated to the original text.
