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BRASÍLIA – The team of the Minister of Economy, Paulo Guedes, plans to adopt at least three measures of the list of suggestions left by the technicians of the government of Michel Temer to compose the turnaround public accounts. These actions, combined with the social security reform promised this year, could save public banks savings of 266 billion rubles by 2022.
Since 2014, the government has been spending more than it is collecting. It was then that a period of successive account bursts began and an explosion of public debt. Between December 2013 and 2018, Bruno's share of gross debt in gross domestic product (GDP) increased from 51.7% to 77%. That's an increase of 25.3 percentage points in just five years. Reversing this image is one of Guedes' main challenges.
During the election campaign, the commitment was to eliminate the public deficit the first year of President Jair Bolsonaro's term. Financial institutions consulted by the Ministry of Economy believe that the accounts were closed in 2018 in the red, for an amount of 126 billion rubles. For this year, the National Congress has authorized the government to register a balance of 139 billion rand in the accounts.
In the list of suggestions left to the new government by the government. former finance minister, Eduardo Guardia, at the end of last year, three proposals pleased more to the Guedes team. The first, and the one that can have the greatest impact on the government's treasury, is to retain the actual pay adjustments of the public service. In this case, the impact would be R $ 96.5 billion over three years. The government also targets the restriction of the payment of wages, with an impact of 43 billion rubles over the period, and the establishment of a new rule of minimum wage adjustment, which provides only the correction for inflation . The expected savings with the measure is R $ 68.7 billion.
According to interlocutors in the economic zone, although the decision has not yet been taken, the new government "does not have much to escape from these measures" to rebalance the public accounts. For the experts, the proposals are welcome because we must contain the growth of federal government spending and stabilize the public debt. Proposals must go through the Congress.
Cascade Effect of Adjustment
One of the most urgent challenges of the Government will be to establish a new rule for the adjustment of the minimum wage from 2020. The current formula only applies until this year. It takes into account the inflation measured by the National Consumer Price Index (CPIN) of the previous year and the change in GDP two years earlier.
The standard was created to guarantee real earnings for workers, but has generated significant weight in the public accounts, since pensions and benefits, such as those granted by the Organic Law on Labor and Employment, have been a major constraint. social badistance (Loas), are linked to the minimum wage. According to the government accounts, a 1% increase in the minimum wage increases social security spending by more than 2 billion rand.
The new rule must be sent to Congress before April. The form of the correction of the minimum must be included in the 2020 budget guidelines proposal that will be presented to the legislature. The Guard team suggested keeping the minimal update only by the INPC.
Compensation would have a new test
In the case of wage premiums, the evaluation of Temer government technicians and the Bolsonaro team indicates that the benefit has little to Incidence on the distribution of income and the creation of jobs under formal contract. The allowance equates to a minimum wage and is paid to workers who receive up to two minimum wages with formal jobs. There are cases of overlapping benefits with social programs such as family allowances and family wages.
It is proposed to modify the eligibility criterion in favor of two minimum wages for one. According to the study by the Temer team, the change would save R $ 7.8 billion in 2020 and R $ 17.1 billion in 2021.
For public servants, the idea is to retain salary adjustments. The increases for the categories have a cascading effect due to the pay parity with the inactive. Even in times of crisis, domestic workers have made pay adjustments higher than inflation.
However, this measure must face resistance. The Temer government has adopted two interim measures (MPs) to defer the salary adjustment of federal executive officers from 2017 to 2018 and from 2018 to 2019. The pressures exerted by the categories exclude proposals.
Deputies were suspended by Federal Supreme Court Minister Ricardo Lewandowski, saying the postponement would result in a breach of the principle of legitimate expectation and legal certainty, as well as a failure to respect the rights incorporated in the badets of the officials. The deputies have not even been voted on by the Congress.
For the specialists, the measures considered are adequate
Public accountants examine appropriate tax measures designed by governments to help ensure the growth of public spending and look at the table of successive tax loops. . According to economist Margarida Gutierrez, professor at the UFRJ, the actions are ongoing because the rate of growth of expenses is unsustainable:
– We have a huge fiscal imbalance. Brazil can not develop if this imbalance persists. Then the government goes into a cliff and we finish the country.
Noting that he was unfamiliar with the proposals in detail, José Roberto Afonso, FBI / FVI researcher and IDP professor, also felt that the three measures could help reduce public spending by more than social security reform.
– I like this type of more ad hoc measure, based on unconstitutional legislation (which does not require amendment of the Constitution), which may have a greater tax impact than constitutional amendments.
Zeina Latif, chief economist at XP Investimentos, notes that the Bolsonaro government should not have much trouble getting the three measures pbaded in Congress.
– The minimum wage is essential to respect the rule of spending limits in the coming years. For Michel Temer, president exhausted and in power last, it could be difficult. With Bolsonaro, it seems easier, "he says.
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