© Reuters. FILE PHOTO: Brazil’s Finance Minister Fernando Haddad reacts as he speaks to journalists after a meeting with Brazil’s Central Bank President Roberto Campos Neto in Brasilia, Brazil, April 3, 2023. REUTERS/ Ueslei Marcelino
BRASILIA (Reuters) – The Brazilian government should review the rules to increase mandatory spending and budget restrictions before the end of the year, once the reform of the tax system has been decided, Finance Minister Fernando Haddad said.
“What we want to discuss, after the tax reform, is a rule that ends with cutting and changing, and gives more stability to this type of spending,” Haddad said in an interview published on Saturday by the Folha de S. Paul.
Progressive governments remove rules linking spending to revenue growth, he said, and then Conservative governments reintroduce them, ending their obligation to spend fixed amounts in areas like education and health.
Brazilian governments permanently face spending difficulties because 95% of the federal budget is tied to mandatory spending, leaving only 5% for discretionary spending.
When they presented the new fiscal framework that proposes to limit the real growth of public spending, Treasury officials said that it would be necessary to review the spending floor in health and education, which is currently linked to the level of government revenue, to avoid the reduction in other areas
Haddad said that he could not anticipate which expenses would be reviewed, whether they would include the readjustment of the minimum wage and the remuneration of public servants, because those decisions corresponded to President Luiz Inacio Lula da Silva.