Economy Minister says Brazil’s spending cap poorly constructed — MercoPress

The economy minister said that Brazil’s spending is not good

Saturday, November 19, 2022 – 10:06 UTC

Guedes stressed that it would be a mistake to retreat from current politics
Guedes stressed that it would be a mistake to retreat from current politics

Brazil’s Economy Minister Paulo Guedes on Friday acknowledged the need to tighten the spending ceiling because it is poorly constructed, but insisted that federal spending limits remain a necessary tool to ensure the integrity of the accounts for the public.

“If you have a fireplace in the house, it’s good to have a chimney. The ceiling is not built, if there is a fire in the house, everyone will die of suffocation. the [spending] the ceiling is poorly constructed. In 2019, we came with the attitude of ‘More Brazil’ to transfer resources to the state and the municipalities, but we could not because we broke the ceiling, which was not built well,” said Guedes in his first statement after the first round of the presidential election on October 30. appearance at the event marking the 30th anniversary of the Secretary of State for the Economy (SPE).

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The administration of President Jair Bolsonaro has cut spending five times. The first was in 2019 when there was a constitutional amendment that allowed the government to remove the ceiling of around R$ 60 billion transferred to the state and municipalities after considering the pre-salt heavy cession. In 2020, the ceiling was hit again because of the War Budget, which allowed the payment of emergency aid and assistance to local governments in the first months of the COVID-19 epidemic. .

The ceiling is three times more. In 2021, the Emergency PEC, which resulted in a new financial system, authorized the expenditure of R$ 44 billion in the payment of emergency aid. Still last year, the PEC of the Precatórios released another R$ 110 billion outside the ceiling: about R$ 65 billion with the change in the formula to adjust the result of the expenditure and around the R$ 45 billion with the postponement of precatórios (debt recognized by the court).

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In July of this year, a constitutional amendment passed R$ 41.2 billion to increase the minimum wage in Brazil to R$ 600 and create an allowance for taxi drivers and transporters.

Guedes also said that there is an alleged conflict between social policies and financial irresponsibility due to the technical incompetence of previous governments. In his view, the current administration has increased social spending without harming public accounts.

“We started the best social program before, with financial responsibility. So, what is this story about social and financial conflicts? It exposes ignorance, technical ignorance and the inability to solve problems,” he asserted, stressing that the country is “on the way to prosperity.” He also said that it is a mistake to retreat from the current economic policy.

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Regarding hunger in the country, Guedes confirmed that the problem existed before and that the current government “saw the invisible” in the creation of the emergency aid in 2020. The program, which took effect in 2020 and 2021, targeted illegal workers. Since the end of last year, Auxílio Brasil has inherited the target population of Bolsa Família.

The minister also cited the economic achievements of the current administration, especially the establishment of Pix, an instant credit system by the Central Bank.

Besides Guedes, the event was attended by the former Minister of Mines and Energy and Secretary of Economic Policy, Adolfo Sachsida; the head of the special adviser on economic studies, Rogério Boueri; and the secretary of economic policy, Pedro Calhman de Miranda. (Source Agency Brasil)


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