Brazil court-ordered govt funds might hit 2022 finances like a “meteor”, says financial system minister By Reuters

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© Reuters. FILE PHOTO: Brazil’s Financial system Minister Paulo Guedes speaks throughout a information convention after a gathering to ship the tax reform bundle on the Nationwide Congress in Brasilia, Brazil, June 25, 2021. REUTERS/Adriano Machado

By Marcela Ayres and Jamie McGeever

BRASILIA (Reuters) – Brazil’s Financial system Minister Paulo Guedes stated on Tuesday that the total fee of 90 billion reais ($17 billion) of federal court docket orders doubtlessly slated for 2022 would hit the federal government finances like a “meteor”.

In a dwell occasion hosted by on-line media outlet Poder 360, Guedes stated the federal government has already drawn up a draft constitutional modification to deal with these potential liabilities, noting that the federal authorities’s discretionary finances is 96 billion reais.

These funds are court-ordered outlays, usually comprising compensation, advantages and tax refunds that the federal government should make following authorized defeats in court docket.

Guedes stated they totaled round 13-16 billion reais a 12 months within the early a part of the final decade, earlier than rising to round 40-50 billion reais a 12 months as the present authorities of President Jair Bolsonaro took energy in 2019.

That has abruptly soared to 90 billion reais, Guedes stated, including that he was unsure how that occurred.

“Perhaps we fell asleep on the wheel,” Guedes stated, including that the federal government could have “failed” someplace alongside the road. However he denied the state of affairs might have been too completely different as a result of these points are largely “out of our attain.”

This renewed deal with Brazil’s fiscal challenges weighed closely on the forex on Tuesday, with the U.S. greenback rising 2% to five.27 reais.

Guedes additionally stated on Tuesday that the beefed-up nationwide Bolsa Familia welfare program slated to be rolled out after November has been budgeted for and won’t threaten the federal government’s ‘spending cap’ fiscal rule.

However the potential 90 billion reais of court-ordered funds, if enforced, would have an effect on all authorities spending, he warned.

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