Government freezes part of the budget to fall within spending cap

volkswagen Government freezes part of the budget to fall within spending cap
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Brazil’s Economy Ministry announced on Tuesday a freeze of BRL 1.72 billion (USD 354 million) in public expenses foreseen in the 2022 budget to meet requirements of the federal spending cap. It is not clear what areas will suffer greatest cuts, and details will be laid out through a presidential decree later this month.

In its latest budget report, the economy ministry says the move is necessary as mandatory expenditure — such as personnel costs — was previously underestimated. Some of the frozen funds will be diverted to increase subsidies, such as the Harvest Plan, to promote agricultural development.

The government may still need to impose further budget cuts in the coming months, as Congress has yet to approve supplementary credit of BRL 2.5 billion.

While the government remains strapped for cash, civil servants are putting pressure on the Bolsonaro administration for hefty wage increases to match Brazil’s inflation rate over the past two years. Labor unions were told to expect a decision on their demands by April 1. However, the cutoff point for civil servants’ wage increases is April 4 due to the upcoming elections.