Despite Pandemic, Brazilian Government Plans to Cut Health Budget in 2021

RIO DE JANEIRO, BRAZIL – At the height of the Covid-19 pandemic, President Bolsonaro’s administration plans to cut the Ministry of Health’s budget to R$127.8 billion (US$25.6 billion) in 2021.

The amount is lower than the R$134.7 billion passed at the start of this year and far below the portfolio’s current spending limit of R$174.8 billion, reached after the release of funds to tackle the health crisis.

Should the proposal be approved, the Healthcare budget for 2021 may be R$7 billion lower than initially planned for this year before the pandemic, or R$47 billion lower than the spending limit reached during Covid-19, which tends to increase pressure for more space in the spending ceiling – the fiscal rule that prevents spending growth above inflation.

The budget debates occur at the time of an internal government dispute over whether or not to raise public spending. On Tuesday last week, Guedes warned that Bolsonaro may end up in the “dark zone” of impeachment if the spending ceiling is breached.

After the creation of the so-called “war budget” that allowed increased spending in the pandemic, there is an open “war” within the government and in Congress to increase resources to finance infrastructure works, bolster the Ministry of Defense’s treasury and put into practice the Renda Brasil (Brazil Income) plan, the Bolsonaro government’s social program that will replace the R$600 emergency aid and the Bolsa Família (Family Grant). The government plans more money for the Ministry of Defense than for Education.

With the risk of losing resources, the Health area will also step up its pressure in Congress. The central government’s budget proposal for next year is in the hands of Paulo Guedes, the Minister of Economy, and should be forwarded to Congress by the end of this month.

Guedes, who has been facing “friendly fire” and open criticism from colleagues in the ministerial Esplanade, does not want to disturb the ceiling. He says the measure, established in former President Michel Temer’s administration, was responsible for enabling a record drop in interest rates and the costs of the rollover of public debt.

The Minister wants to discuss the 2021 Budget along with measures to cut spending through “triggers” – which would skyrocket once the increase in compulsory spending (such as payroll) places other expenses such as investments in check.

“It’s as if the government thinks that Covid-19 will simply disappear on December 31st, 2020,” says Luiza Pinheiro, a political advisor to the Institute of Socioeconomic Studies (INESC). Pinheiro says the government disregards the fact that part of the structure created to address the pandemic should be preserved, such as hospital beds and ventilators.

“Furthermore, it ignores the services that were not provided in 2020 because of the pandemic (such as elective surgeries) and the increased demand for the SUS (National Health System) due to high unemployment, which leads people to lose coverage under their and their families’ health plans.

Distribution

Of the amount planned for 2021 for the Ministry of Health, R$110.1 billion would be compulsory spending, such as employee payroll, which cannot be blocked. Another R$16.5 billion are discretionary amounts, which can be reallocated by the government, such as for contracting services and investments.

In other words, the resources that Health may choose where to apply, would be approximately half of what was allocated to the portfolio at the start of 2020 and a quarter of what has been authorized to date, after being boosted as a result of the pandemic.

The figure presented by Guedes’ team does not compute parliamentary amendments. Francisco Funcia, technical advisor to the National Health Council (CNS), estimates that in order to comply with the constitutional floor for health, about R$10 billion worth of amendments will need to be added. “It’s a double step back. Not only does it reduce the current budget, but it also conditions a large share of amendments,” he said.

This year, to tackle Covid-19, the Ministry of Health received a contribution of R$41.7 billion through ten Provisional Measures. The funds were used to bolster the state and municipal governments’ cash to fight the pandemic, buy ventilators and other supplies, and pay for hospitalization expenses incurred by SUS.

In addition, some R$2 billion will be used by Fiocruz to enable the purchase, processing, and distribution of 100 million doses of the vaccine against Covid-19 developed by Oxford University and the AstraZeneca pharmaceutical company. Of the extra resources authorized for the pandemic, the Ministry authorized the payment of R$27.6 billion and, in fact, disbursed R$20.7 billion.

Questioned, the Ministry of Health did not comment. The Ministry of Economy says the budget proposal for 2021 is still under internal debate and may be changed up to August 31st, the limit for its forwarding to Congress.

Source: O Estado de S. Paulo