Increased spending of up to R$136 billion in 2023 would not represent fiscal expansion, says Nelson Barbosa.

BRASILIA (Reuters) - An expansion of federal government spending by up to 136 billion reais in 2023 would not represent a fiscal expansion, said former minister Nelson Barbosa, one of the coordinators of the economic group for the government transition, arguing on Monday that the Jair Bolsonaro administration has proposed spending, as a proportion of GDP, that is lower than in 2022.

According to Barbosa, the transition team working in Congress is negotiating the value of... Constitutional amendment that removes expenses from the spending cap rule., noting that the economic working group does not have a recommendation to make regarding the figure.

The former minister explained that government spending in 2022 should be close to 19% of GDP, while the 2023 Budget Bill submitted by the current administration projects spending of 17,6% of GDP.

"This means that if you add up to 136 billion in spending to next year's budget, in terms of the size of the economy, it will not be fiscal expansion; the spending will be the same as what was actually done in the last year of the Bolsonaro government," he said, adding that the figure is only a reference.

The so-called Transition Amendment, presented by the elected government, creates an exception to the spending cap next year, mainly for the payment of social benefits, allowing an increase of almost 200 billion reais in expenses for the year.

Asked about a An alternative proposal presented by lawmakers in Congress with a smaller exception to the spending cap, of 70 billion reais.Barbosa said the amount "is too little".

In stating that the discussion about income tax reform is not yet mature, he affirmed that the idea is for the measure to be debated in 2023 and to take effect in 2024 -- the adjustment of the income tax table would be included in this proposal.

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