Lula’s promises and Bolsonaro’s account would cost more than R$ 400 billion, says XP

A renegotiation of the project for the Federal Government Budget in 2023 to contemplate the promises of President-elect Luiz Inácio Lula da Silva and also to accommodate accounts left by the government of Jair Bolsonaro, many of them also on the PT agenda, could represent an extra expense of over BRL 400 billion.

The estimates were made by the economic analysis team at brokerage XP, and take into account a scenario in which all new proposals gain full space in the expense plan for the coming year.

Economists do not believe, however, that this should happen, and the estimates most accepted by market analysts take for granted an increase in expenses in the order of R$100 billion to R$140 billion, values ​​that would exceed the limit that is allowed for next year under the spending cap rule.

They include the permanent expansion of Auxílio Brasil from the planned BRL 400 to BRL 600, an above-inflation readjustment to the minimum wage and additional funds for areas such as health and culture.

The renegotiation of the Budget and the creation of a “permission” to spend beyond the ceiling in 2023 are the central theme of the PEC da Transição, a proposed amendment to the Constitution that is being discussed between Lula’s team and Congress. The details of the text are not yet known and should be presented next week.

In XP’s accounts, embedding Lula’s main promises in the planning of spending for 2023 would require, in the most generous scenario, R$ 250.2 billion.

Other additions to discussions that are pending from the Bolsonaro government and that did not make it into the budget project would cost another BRL 173.3 billion.

This is the case of the exemption made on fuel – which is valid only until this year, but can be extended -, and a readjustment for federal servers, who have been frozen since before the pandemic. In total, the bill would be R$ 423.50 billion.

“We estimate the costs of those promises made by Lula in the campaign and also the residual values ​​of things that were left open by the Bolsonaro government”, explains Tiago Sbardelotto, economist at XP for public accounts. “But we think that not all things should be included in the Transition PEC.”

The income tax exemption for everyone who earns up to R$ 5,000, for example, promised by Lula in the campaign, is one of the points that Sbardelotto believes are not ready now – “it has a very high cost and it is a discussion that is not must be done now,” he said.

The measure is the one that would have the most impact on the government’s cash and, in XP’s estimates, would mean a tax waiver of R$122 billion.

The payment of precatories that have been postponed is another high bill that, in Sbartdelotto’s view, will need more negotiation and should remain out for now. It would be another R$ 54.4 billion to pay them off.

“A very high value, around R$ 200 billion, would be difficult for the market to accept; but there is a view today that it could be something in the range of BRL 100 billion to BRL 120 billion”, said the XP economist, referring to the size of the hole in the ceiling that investors and financial market analysts are already looking for. willing to tolerate in this review.

“It might even go a little further than that, as long as there’s a good explanation for why it’s done. There are really expenses that need to be recomposed, which were out of touch with reality”, said Sbartdelotto, mentioning extra funds expected for the health ministry and also for culture.