The lack of flexibility that the public budget has is the main topic of recent weeks on the Brazilian economic and political scene. What is questioned is the need for a structural reform in government spending rules to increase space for investment.
In an interview with WWMarcus Pestana, executive director of the Independent Fiscal Institution (IFI), linked to the Senate, reiterates that mandatory expenses are “cornering” the government’s investment capacity, but also indicates that the debate is still very shallow.
“The Brazilian budget is one of the most constrained in the world, and the problem is that the government’s ability to govern is getting smaller and smaller”, points out the IFI spokesperson.
The latest government spending report shows that around 91% are mandatory — those linked to health, education and social benefits, for example. The tendency is for the share to grow even more, and the little space that remains is for discretionary spending — investments.
Among the resources linked to the obligation are parliamentary amendments. This Monday (11), the Institution published a technical note pointing out that these resources issued by members of the Legislature to finance projects increase the rigidity of the Federal Budget.
According to the IFI, the share of expenses with parliamentary amendments in the total percentage of discretionary expenses grew from 11.1%, in 2020, to 16.8%, in 2024.
The tool also centralizes discussions after approval.
Pestana reinforces that the problem is not the amendments themselves, but the governance behind them and their obligation in the budget.
The economist argues that its application be reviewed so that good practices are adopted, as they would be “an important lever for regional development”.
“A democratic discussion is needed so that the amendments are tools to strengthen public policies in favor of the population. It’s a question of quantity and quality”, points out the director of IFI.
“It doesn’t mean there’s no quality in the spending. There are health centers, daycare centers and infrastructure projects that city halls or philanthropists did not make possible without amendments. They have a localist character, but have a high impact on increasing productivity. It is necessary to recover the nature of the instrument of amendments. Good governance rules are needed.”
