Brazil’s Economy Minister Paulo Guedes argued that the government should use some $200 million from international reserves to pay the New Development Bank (NDB), the BRICS bank. To do this, a new understanding must be reached at the Federal Court of Accounts (TCU) on the cap on public spending, which limits expanses to the increase in inflation from the year prior.
As it stands today, Guedes pointed out, funds must come from the budget and the operation would impact the spending cap. In his view, however, the goal of the target is to prevent the growth of recurrent expenses, and, in this case, the measure would be just a reallocation of funds out of the country. In August this year, Brazil’s stock of international reserves stood at $370.395 billion, as per Central Bank data.
“We’re failing to honor this commitment due to the lack of budget room,” the minister declared Monday (Oct. 4) during a video conference for the TCU’s 1st Budgetary Week. He called for support from the court, which is tasked with ensuring the cap is not breached, in addressing the issue.
The bank of the BRICS —a bloc formed by Brazil, Russia, India, China, and South Africa, was installed in Shanghai, China, in 2015, with the goal of financing projects in infrastructure and development in poor and developing countries. The institution’s capital was built with $10 billion from each bloc member, and the payment is made in installments. For approximately a year and a half, Guedes noted, Brazil has not met its duty of sending the allocated funds to the NDB.