Budget for 2021 reduces 5.3% of primary spending.

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The Executive Branch presented this afternoon the budget bill for fiscal year 2021, with a historical decrease of ¢ 368.6 billion (-5.3%) in primary spending, that is, not including interest and amortization, going from ¢ 6 959.1 billion in the current 2020 budget, to ¢ 6 590.5 billion for 2021.

For the preparation of this project, the necessary adjustments were made, in order to fulfill the commitment to protect the fiscal situation of the country responsibly, while continuing to provide the population with essential public goods and services.

An important reduction in spending for 2021 is reflected in the application of the fiscal rule, which establishes a limit to the growth of current expenses (salaries, rentals, travel, services, office supplies, among others), but allows the growth of the capital expenditure; all with the aim of reducing the fiscal deficit over time.

According to this rule, by 2021 current spending could grow up to 4.13%. But in the project presented today to the Legislative Assembly, the growth limit was set at 0.77%, if current spending on the project is compared vs. the current expenditure of the initial 2020 budget, thus demonstrating the Government’s efforts to lower public spending. If this comparison is made with the current budget 2020, the current expenditure in the project sent does not show any variation.

For the first time, the proposed budget presented includes the 50 decentralized bodies of the Central Administration, in compliance with Law 9524 (“Strengthening of the budget control of the decentralized bodies of the Central Government”). This will reduce the fragmentation of the State, improve public spending controls, as well as coordination, planning and execution in the institutions in this and the following years.

Given that inclusion of the decentralized, the draft budget of the Government of the Republic for next year amounts to ¢ 11.4 billion, (31.9% of GDP). Of that amount, 45.1% will be financed through taxes and new income resulting from the incorporation of the budgets of these entities into the National Budget. The remaining amount (54.9%) comes from debt financing.

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