Guedes says the current definition of spending cap is wrong

Economy Minister Paulo Guedes has criticized the slowdown in public resources due to faulty spending cap rules.

As an example, he cited the need for surplus capitalization of international banks in which Brazil is a partner, such as Briscs NDB, through current budget expenditures.

“We haven’t paid the (NDB) for a little over a year, because of the lack of budget space, because of the roof. It’s a misidentification of the roof.

During his participation in the opening ceremony of the first budget, he explained that the government should generate a surplus, and spend a cap on buying the reserves it already has, and which it already owns, to capitalize an offshore bank as if it were a recurring expense.” Week of the Federal Court of Accounts (TCU), on Monday (4).

Guedes also argued that the capitalization of development banks and international organizations is not an expenditure, but a movement of the capital account. The Minister requested support and assistance from the Audit Bureau so that public resources can be managed with more freedom and flexibility in reallocation.

“These kinds of problems, we have to tackle them together because they are pitfalls. These are the difficulties. We are unable to pay in the capital abroad, with no space to use the roof here,” he added.

In the Minister’s discretion, the General Budget Index is still a legacy of the hyperinflationary period.

“On the margins, annual budget increases should be unrestricted, unindexed and free. Also to avoid puddles that happen often. There is a shortage of funds for health and education, but R$30 billion or R$40 billion remain in place. Sometimes not It can be reformulated even within the ministry itself,” he said.

The head of the government’s economic team also stressed that the reallocation of resources in his administration aims to reduce the size of the state and not increase it, as the ceiling seeks to prevent it.

Now, we are discussing how to make stabilization boxes. Now, we can pay into this stabilization fund with PPSA shares, with the shares held by BNDES in Petrobras, such as paying into this capital. […] He advocated the spending cap in order not to allow the executive branch to grow too much, but what if the opposite was true and the downsizing of the state, making this the transformation we were trying to achieve.”