Accounts Court approves Bolsonaro’s 2021 books but raises concerns

With reservations, Brazil’s Federal Accounts Court — a sort of audit tribunal that monitors public spending — approved the government’s 2021 accounts. 

The Jair Bolsonaro administration has now had three out of three of its accounts approved with reservations — which means that auditors flagged irregularities in its books every year of the administration thus far, but they were not severe enough to impair the overall budget execution.

Court member Aroldo Cedraz, the rapporteur of the analysis, criticized the government’s decision to jack up the amount of money earmarked for opaque budgetary amendments which allow lawmakers to pour money into their constituencies.

These instruments are so hard to scrutinize that they have been dubbed the “secret budget” by the Brazilian press.

Larger grants resulted, per Mr. Cedraz, in the reduction of the government’s available money for mandatory and discretionary expenditures (funding and investment by the public sector, respectively). The rapporteur also criticized the lack of objective criteria for distributing the grants. The responsibility for the final decision on Mr. Bolsonaro’s 2021 books lies with Congress.

There are many red flags for the 2022 accounts. 

President Bolsonaro’s re-election project is being fueled by a heavy dose of stimulus, with proposals such as fuel subsidies and a readjustment of Auxílio Brasil, the government’s flagship cash-transfer program, making investors grow wary of the Brazilian economy.

Signs of growing investor mistrust are reflected in Brazil’s 5-year Credit Default Swaps (CDS) — commonly called the country risk. They topped the 280-point mark this week and are at their highest level since May 2020, well above the range of 205 points at the beginning of the year.

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