After Brazilian truckers staged a 10-day strike and drove the country into chaos, the federal administration has agreed to lower diesel prices through subsidies, as Petrobras’s pricing policy will remain – at least for now. President Michel Temer announced a BRL 0.46/liter reduction, which will cost at least BRL 9.6 billion in this year’s budget.
According to the federal spending cap approved in 2016, the federal administration cannot create new expenses without slashing costs to compensate. So, how is the government paying for that reduction in fuel prices?
Part of it has already been announced: Congress approved a project to implement taxes on the payroll for companies in the most productive sectors. That, however, will account for BRL 0.11 of the BRL 0.46 reduction. The other BRL 0.30/liter will come from budget cuts in nearly all areas of the federal administration – including education and healthcare programs.