By Bernardo Caram
BRASILIA (Reuters) – Brazil’s 2023 budget bill to be sent to Congress on Wednesday should lower the Auxílio Brasil welfare program to 400 reais per family, but a presidential message is expected to stress the intention to keep monthly payouts at current levels, said two sources with knowledge of the matter.
The sources, who spoke anonymously as the proposal is private, said that was the best way to formally corroborate President’s Jair Bolsonaro promise to maintain cash handouts at 600 reais ($118.31) if he is re-elected in October.
The government cannot simply increase the program, at an estimated cost of 50 billion reais ($9.78 billion), because that would disrespect the constitutional spending cap, which limits the growth of public expenditures, said one of the sources.
Former leftist president Luiz Inácio Lula da Silva, who leads opinion polls, has also said that he will keep the program unchanged, without specifying how. Lula accused Bolsonaro of failing to incorporate the pledge into next year’s budget.
Congress voted in July to boost the program until the end of the year by 50% to 600 reais, bypassing the spending cap on the grounds that the war in Ukraine had generated extraordinary inflationary effects.
If Bolsonaro wins the election, Economy Minister Paulo Guedes said the government would work to approve the income tax reform later this year, providing for the taxation of dividends to fund this social spending.
Guedes said that budget de-indexing could make room for such expenditure under the spending cap, which would require the approval of a constitutional amendment.
As reported by Reuters, the 2023 budget bill will forecast a primary deficit of between 60 billion and 65 billion reais for the central government, assuming Auxílio Brasil handouts of 400 reais per family. The fiscal shortfall should grow significantly since the benefit increase is taken for granted regardless of who wins the elections.
($1 = 5.0716 reais)
(Reporting by Bernardo Caram in Brasilia; Writing by Marcela Ayres; Editing by Matthew Lewis)
