Spending outside the next government’s ceiling could be 83% higher than in 2022, says economist

A survey prepared by the economist and strategist at Mont Capital, Marcelo Cypriano, shows that spending above the ceiling programmed by the transition team of the president-elect, Luiz Inácio Lula da Silva, is R$ 108 billion more than the extra projected for this year, that is, 83% more than in 2022, which are at R$ 130.2 billion.

According to the research, if you count the expenses that are outside the limit provided for in Constitutional Amendment 95/2016, the next government will extrapolate R$ 238 billion from the budget. If only the “Pec of the transition” is considered, the value is R$ 175 billion.

Cypriano explains that, of the total expenses above the ceiling foreseen in the Pec of the transition, around R$ 55 billion would be to maintain the Auxílio Brasil of R$ 600. The remainder, which is R$ 120 billion, to cover additional payments that are being proposed. “This extra that is leaving Pec further away, in addition to showing how much this extra-roof is above what it is in 2022”, he points out.

The economist shows that the R$175 billion waiver – license to spend beyond the ceiling – that is being proposed represents a real growth of 7% in total spending. “Continuing with a primary surplus, as the current one is, requires a change that Lula’s transition team is not willing to make”, evaluates Cypriano.

For him, tossing the bill to the previous government doesn’t work. “Analyzing the current government scenario, as spending subject to the ceiling is at 75% of the limit, it is slowing down between October and December, as there were payments of precatories”, he details.

In addition, Cypriano also points out that, this year, the extra-ceiling spending also slows down, as there are other episodes that contributed to this, such as the delivery of Campo de Marte and the transfer from Eletrobras.

“October’s collection usually competes to be the biggest of the year. The expectation is that the federal fiscal surplus will grow in the final months of 2022, which makes the 2023 budget even higher,” he says.

In the view of economist and professor at FGV EAESP, Nelson Marconi, if public spending has to increase – and it will not be temporarily, as some have been dammed up – the transition team must say how it will finance and how it will deal with the fiscal issue in the medium term.

“You can think about financing investments with funds backed by dividends from state-owned companies, reserves and even monetary issuance, but it is also necessary to define the trajectory of current expenditure”, he declares.

Marconi says that, in addition to being clear about the tax, budget and administrative reform proposals, it is necessary to be predictable about the evolution of the public debt. “The next government must be clear on how the reduction trajectory will be in the medium and long term. Otherwise, there will be a lot of resistance to the measures that the government will need to adopt to resume growth and eliminate extreme poverty”, he assesses.