PT wants to burst spending ceiling by up to BRL 100 billion in 2023

The team of economists that collaborates with the government program of former president Luiz Inácio Lula da Silva, of the PT, is studying a request for a license to spend between R$60 billion and R$100 billion outside the fiscal limits in 2023.

The main objective of the so-called “waiver” of the spending ceiling rule is to fund the continuity of payment of the Auxílio Brasil of R$ 600. The cost of maintaining the benefit at this level is around R$ 58 billion.

In recent weeks, interlocutors of the PT campaign have been talking to financial market managers to test what would be accepted while a possible new PT government formulates a fiscal policy to replace the spending ceiling, a wish that Lula often repeats.

According to reports made to CNN by executives who participated in the meetings, the interval presented by the PT campaign would be the maximum tolerable by the market, since it opens up significant space for more spending in the first year of government.

They have also warned economists linked to Lula that the acceptance of the waiver in this model, it is conditioned to the presentation of a new robust, credible tax rule that has the support of the National Congress.

If it really wants to end the spending ceiling, an eventual PT government would have to present two different solutions, in the opinion of financial managers. One of them needs to be a mechanism to control rising expenditures.

According to PT campaign sources, one idea would be to adopt an index that follows the growth of the economy, taking care to prevent the cost of the State from growing more than GDP, but also avoiding a stagnation of spending as the ceiling imposes.

According to an investigation by Caio Junqueira, an analyst at CNN one of the models under debate in the PT campaign is the adoption of a band for primary surplus targets.

The target would give the government the freedom to run a smaller surplus in public accounts, or even a deficit, to maintain fiscal stimulus measures in periods of lower growth.

So far, economists who talk about the PT’s plans do not give details about the economic program.

More information is expected to be released after the first round. According to financial executives, something more consistent needs to be presented at the risk of increasing negative perception about what would be a new PT term in the Presidency of the Republic.