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There was no need to take all the Brazil Aid out of the spending ceiling, says economist

For the economic commentator of CNN Aod Cunha, what scared the markets the most this Thursday (17th) was the size and way in which the loophole included in the Transition PEC, or “Exultation PEC”, as it has already been called, was proposed.

The proposed amendment to the Constitution presented on Wednesday (17) by the team of President-elect Luiz Inácio Lula da Silva proposed extra expenses and outside the ceiling of R$ 198 billion in 2023, double what was expected by the market. As a result, both the stock exchange and the dollar had another bitter day of trading in this Thursday’s session.

The initial idea of ​​the PEC was to make adjustments to the Budget proposal for the next year in order to accommodate electoral promises and programs that were not foreseen and that do not fit the limit defined by the expenditure ceiling for the year, such as the maintenance of the Auxílio Brasil in R$600 and a higher adjustment to the minimum wage.

The proposal for the budget law was presented by the current government, providing aid of only R$ 400 in 2023.

“There was already, within the ceiling, a budget forecast for R$ 400; needed [de acréscimo de gastos] just for the R$ 200. That would be something like R$ 50 billion or R$ 60 billion [a mais]”, Cunha explained.

“But the new PEC takes away all the Brazil Aid, and we are talking about R$ 175 billion, which opens up more space for expenses within the Budget itself, for works or other expenses. That’s the really scary thing, because it means we could go for a primary deficit next year of up to 2% [do PIB]🇧🇷

Source: CNN Brasil

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