Brasília – The Congress-determined hike in obligatory and imposing spending will cause federal investment to reach BRL 22.4 billion (USD 5.5 billion) in 2020. With 94.5% of the expenditures already apportioned, the 2020 federal government budget will devote a 16-year lowest level for investment, which covers public works and the purchase of equipment.
When adjusted by the Extended National Consumer Price Index (IPCA), the investment budget is only higher to 2004’s, when federal government invested BRL 20.8 billion (USD 5.1 billion).
Compared to the Gross Domestic Product (GDP), investment will amount to just 0.3% in 2020. This is less than half the 2019 spending. The National Treasury estimates that investment will end 2019 around BRL 50 billion, from 0.65% to 0.7% of the GDP. The figure will be made public only in late January.
This budget quota of BRL 22.4 billion covers only direct investment made by the ministries, ignoring the investment of BRL 121.5 billion (USD 30 billion) by state-owned companies. Adding up both figures, the investment the budget allowed for reaches BRL 143.9 billion (USD 35.5 billion). But state-owned companies will invest less too. According to the Federal Government Equity Bulletin made public on the 20th, the public companies carried out just 26.4% of the investment allowed for through November.
According to the economic team, the decline in investment reflects an increase in obligatory spending that is higher than inflation, which reduces the available Budget allowance.
In force since 2017, the federal expenditure limit is another restriction that reduces the room for investment. That’s because, while total spending is locked by inflation, several obligatory expenditures grow higher than inflation.
Translated by Guilherme Miranda
