Brazil govt to freeze $2.1 bln in expenditures to comply with fiscal rule
By Marcela Ayres
BRASILIA, May 20 (Reuters) - Brazil's Economy Ministry on Friday said it needs to freeze 10 billion reais ($2.1 billion) in expenditures to comply with the spending cap rule, which limits spending growth to the previous year's inflation.
The limitation highlights President Jair Bolsonaro's difficulties to approve new expenses that are not yet included in the budget while seeking reelection in October.
This is the case of a much-demanded wage increase for civil servants, at a time when several categories continue to paralyze services to press for salary adjustments amid double-digit inflation in Latin America's largest economy.
The need for a freeze jumped from the 1.7 billion reais budget block described as necessary in March, according to the Economy Ministry latest bi-monthly revenue and expenditure report.
According to the ministry, new blocking allows other crucial expenses to be made without breaching the spending cap, including 4.8 billion reais with lost court decisions and 2.3 billion reais in agricultural subsidies.
The ministry projected a 2022 primary budget deficit of 65.5 billion reais ($13.45 billion) for the central government, slightly better than the 66.9 billion reais deficit seen in March and against an official deficit target of 170.5 billion reais this year.
The projection for net revenues was increased by 36.3 billion reais compared to March, mainly due to booming tax revenue.
Expenses grew by 34.9 billion reais, primarily affected by higher discretionary spending from the executive branch. ($1 = 4.8625 reais)
Reporting by Marcela Ayres; Editing by Sandra Maler
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.