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Next President May End Up Facing Additional Expenditures that Reach US$ 17.5 billion

07/13/2018 - 12h36

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MAELI PRADO
BERNARDO CARAM
LAÍS ALEGRETTI
BRASÍLIA

In light of the bills that are circulating in Brazil's Congress with a certain urgency, coupled with the spending caps that the current administration's economic team has failed to get approved, Brazil's next president may have to face expenditures that could reach up to R$ 68 billion (US$ 17,6 billion) in 2019. The amount is considerably higher than the R$ 45 billion (US$ 11.6 billion) in basic expenses that the Union spends every year.

In addition to the legislative guidelines that will lead to a significant drop in revenues, there are also expenditures that the government itself generated and didn't have the political support to reverse, such as standard of living adjustments for civil servants.

This scenario worries the current administration's economic team because the expenditures that the government has been authorized to handle in 2019 may add up to around R$ 100 billion (US$ 26 billion) - 90% of which the government is required to carry out by law.

The figure already includes basic expenses such as water, phone, electricity and rent bills. Such expenditures on their own amount to approximately R$ 45 billion (US$ 11.6 billion).

The ease with which legislation that highly impacts government finances is approved is connected to the fact that an unpopular administration is reaching the end of its term without the kind of strength required to bar such bills.

The bills were approved with the support of allies. If they are in fact carried out, the most significant expenditure requires the federal government to annually transfer R$ 39 billion (US$ 10 billion) to all states (including the Federal District) in order to compensate for sales taxes that are not collected from a part of the country's exports.

Translated by THOMAS MATHEWSON

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