By: StoneX Intelligence Brazil, StoneX Intelligence Brazil
Foreign scenario
After a week marked by signs of monetary tightening in the United States, next week should be relatively empty of relevant indicators. However, the rapid spread of the omicron variant of Covid-19 should continue on the news and worry investors. Its rate of spread is so high that even an apparent lower hospitalization and mortality rate is not preventing health care systems from being overwhelmed. This variant is also causing abrupt absenteeism and risks exacerbating bottlenecks in production and logistics chains, especially in China, which adopts a "zero Covid” strategy to address its spread. Last week, Chinese authorities extended the containment of the port city of Tianjin to control the omicron variant. The case is being treated with extreme urgency because of the city's proximity to the capital, Beijing, and the proximity to the Winter Olympics, scheduled to begin in the neighboring province of Hubei on February 4. Later, Anyang city's turn to be confined, which has just over five million inhabitants and is in Henan province, neighboring Tianjin and Hubei. Also, Hong Kong decided to close its kindergartens, offer vaccinations for children as young as five, and restrict some types of entry and exit to the city. After testing, more than 920,000 residents found 42 positive cases for Covid-19.
Domestic Scenario
The public servers' protest for salary adjustment should gain prominence throughout the week in the domestic scenario. After a personal request from Jair Bolsonaro, which involved a letter from the Minister of Economy to the rapporteur of the Annual Budget Bill 2022, Congressman Hugo Leal (PSD-RJ), "after the decision of the President of the Republic" and a call from the President himself to the rapporteur, established that this year's budget would include salary increases only for federal security personnel, i.e., Federal Police, Federal Highway Police, and the National Penitentiary Department. The reaction among the civil service was not positive. The Special Department of Federal Revenue of Brazil, which had been promised a readjustment this year, was the first to mobilize, approving in assembly the paralysis of all national and regional projects of the body, the adoption of standard operation in customs, the indicative shutdown of activities, the target zero (not reaching any target), the non-filling of management reports and the support of the apparent surrender of all positions in commission and management positions of the Federal Revenue. Subsequently, the Permanent National Forum of State Typical Careers (Fonacate), which brings together 37 associations and unions and represents about 200 thousand public servants, defined a first general strike this Tuesday (18). Suppose there is no progress in the negotiations, another strike on January 25 and 26. If there is still no progress, Fonacate intends to hold a general strike starting February 14.
In a statement released Thursday, Fonacate says 19 categories joined the strike on Tuesday, among them servers of the judiciary, Itamaraty servers, several categories of auditors, intelligence officers and servers of the Central Bank, Securities Commission and the Superintendence of Private Insurance. According to the entity's president, Rudinei Marques, the Bolsonaro government has dismantled all avenues of negotiation that existed until the Temer government and "imploded" the channels of dialogue, which created the conditions for a general strike. Rudinei also recalls that public servants have been without a readjustment since 2017. The Federal Revenue category appears, publicly, to be most mobilized. The National Union of Federal Revenue Auditors (Sindifisco) gathered 1,288 requests for resignation from management and leadership positions to pressure the government to sit at the negotiating table. However, on Tuesday (11), the chief of staff of the Federal Revenue, Antonio Márcio de Oliveira Aguiar, ordered in writing that no resignation be made effective in the Official Gazette of the Union, a decision that the union claims is illegal and threatens to file a lawsuit.
Calculations made by the technical area of the government and published today by Reuters indicate that the Ministry of Economy is considering vetoing up to BRL 9 billion to "recompose expenses that would be underestimated in the accounts approved by the National Congress," according to Reuters. According to the news, the problems would range from ministries that negotiated funds directly with the general budget rapporteur of the Congress – the rapporteur's amendments, called "secret budget" –, to funds for cities facing emergency or calamity due to excessive rainfall. However, given the volatile environment of protests by civil servants, the government may look to this amount to meet the demands of the civil service.
Finally, it is noteworthy that Bolsonaro issued a decree this week in which he further undermines the powers of the Economy Minister Paulo Guedes. The text, published yesterday (13) in the Official Gazette, delegates to the Ministry of the Civil House - and to Minister Ciro Nogueira, president of the PP, one of the main center-right parties in the Lower House – the prerogative of validating the transfers of public resources for the portfolios in 2022, an authority that is traditionally exercised by the "Treasury" or the Ministry of Economy. In practice, the decree states that both ministries need to authorize resource transfers. The Administration argued that it was simply trying to divide responsibilities to have more standardization and avoid that expenses would occur without an accounting from the Civil House, that is, more as a bureaucracy than as a control measure. However, it is hard to argue that this could not be done in the previous standards, not representing another gain in power of the legislative wing over the allocation of resources and a kind of intervention on Guedes' authority.
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