Brazil to draft 2022 budget before approving this year’s proposal

Approaching the end of April, the Brazilian government has yet to approve a federal budget for this year. However, amid the chaos, the administration submitted the budget guidelines law (LDO) for 2022.

According to the Constitution, the LDO for the following year must be presented by April 15 and approved by mid-July. Akin to a “draft budget,” the LDO sets out financial parameters and fiscal targets for the next year.

While the government has submitted these guidelines on time, the move served to showcase the sheer extent of delays on the 2021 federal budget. Congress approved an “unworkable” financial proposal for this year, and President Jair Bolsonaro has until April 22 to sign off on it, or veto it partially or entirely. The administration fears that approving the budget as it would put Mr. Bolsonaro at risk of impeachment for breaching fiscal rules.

The 2022 budget proposal

In the draft delivered to Congress last week, the Economy Ministry proposed a fixed primary deficit target of BRL 170.47 billion (USD 30.7 billion). If confirmed, 2022 will become Brazil’s ninth consecutive year having a hole in its public...