The high inflation in the second half of this year increased by R$ 14.5 billion the resources to be released in 2022 by the Proposed Amendment to the Constitution (PEC) of Precatório. The fiscal space created went from BRL 91.6 billion to BRL 106.1 billion. However, of this total, the government will only have R$ 1.1 billion to be freely spent.
The estimate was announced by the special secretary of the Treasury and Budget of the Ministry of Economy, Esteves Colnago. He participated in the thematic session of the Senate that discusses the PEC dos Precatório, whose vote is scheduled for this week in the Committee on Constitution and Justice (CCJ) of the House.
According to Colnago, the change took place after the revision of official projections for the economy in 2021. Last week, the Economic Policy Secretariat of the Ministry of Economy raised to 9.7% the official inflation estimate by the Extended National Consumer Price Index (IPCA) for 2021. When the government sent the PEC to Congress, the estimate was at 8.7%.
According to the special secretary, of the BRL 106.1 billion in fiscal space, BRL 62.2 billion result from the change in the formula for calculating the spending ceiling, which will now consider the full inflation of the previous year, instead of the inflation accumulated between July of two years ago and June of the year before the current Budget. The previous projection was at R$ 47 billion.
The remaining R$43.8 billion (out of the total of R$106.1 billion) will come from the installment payment of large-value court orders, debts definitively recognized by the Courts. The previous estimate was at R$44.6 billion.
Free space
Despite the greater fiscal space, the government will have only R$1.1 billion free to be spent on a discretionary (not mandatory) basis. This money can be used for investments (public works) or in meeting the rapporteur’s parliamentary amendments, if the PEC is approved.
Of the BRL 106.1 billion, BRL 51.1 billion will fund the increase in Auxílio Brasil to BRL 400; R$48.9 billion are committed to mandatory expenditures, such as Social Security, constitutional minimums for health and education and the Budget of other Powers; and BRL 5.3 billion will be spent on the extension of the payroll exemption for one year. As a result, only R$1.1 billion will be left over for other expenses.
With the exception of mandatory expenses, which will be recalculated as inflation rises, other expenses are not included in the 2022 Annual Budget Law project, sent to Congress at the end of August. These expenses can only be included in the project if the PEC dos Precatório is approved by Congress.
The amount of R$ 1.1 billion for free spending does not cover measures announced by the government, such as aid to truck drivers, the supply of gas tickets for the poorest population and the readjustment of the federal civil service. According to Colnago, next year’s Budget has R$ 1.5 billion committed to a court decision that determined the payment of personnel expenses not honored in previous years, but, for the time being, there are no funds for salary adjustments.
