Brazil’s Federal Investments Show Accumulated 16.3 Percent Drop in 2019

RIO DE JANEIRO, BRAZIL – Amidst the growth in mandatory spending, investments – spending on construction and purchase of equipment – accumulated a drop in 2019.

According to figures released yesterday, November 28th, by the National Treasury, investments totaled R$30.888 billion (US$7.722 billion) from January to October, a 16.3 percent drop in relation to the same period last year, discounting the official inflation rate of the Broad National Consumer Price Index (IPCA).

Expenses with the Growth Acceleration Program (PAC) totaled R$16.095 billion from January to October, a retraction of 18.9 percent in relation to the same months of last year, discounting inflation.

Expenses with the Minha Casa, Minha Vida (“My House, My Life”) program, however, increased 2.6 percent over the IPCA, reaching R$3.178 billion in the first ten months of the year.

From January to October, net revenues accumulated an increase of 0.3 percent over the IPCA. In contrast, total expenses fell one percent after inflation. Social Welfare spending climbed three percent in addition to inflation, against a 1.1 percent increase (also above inflation) in personnel spending.

However, other compulsory expenses accumulated a drop of 5.9 percent after inflation, mainly due to expenses that occurred last year but were not repeated this year, such as the payment of compensation under the Kandir Law (exempting from tax any product that is exported) and expenses with campaign financing.

Expenses related to the Student Financing Fund (-48.1 percent), payroll relief (-27.6 percent), and subsidies (-26.9 percent) also decreased.

Costs incurred with the maintenance of public administration accumulate a 7.2 percent drop discounting inflation in the first ten months of the year. The drop was due to the contingency of resources in force during most of the year.

Last week, the government released all funds blocked in 2019. The release was achieved due to the fact that the government raised extraordinary revenues with taxes on the sale of state-owned subsidiaries and through the surplus transfer of rights auctions and the pre-salt distribution.

Source: Agência Brasil