After several weeks of keeping it shelved, the Daniel Ortega regime released this Thursday the content of the draft General Budget of the Republic for next year, which reveals that after closing 2021 with a strong increase in public spending and investment , for 2022 it budgeted lower amounts for both purposes when compared with the closing figures of this year’s budget, but there is an increase if these are compared with the public spending initially planned in the current year.
In the 2022 budget project, the Government presented two comparatives. In the first instance, it compares the budgetary amounts for next year with respect to those that were planned this year and in a second one related to the updated budget allocations, which incorporate the resources that entered the country via external resources and higher tax collection to attend the pandemic. and the reconstruction of hurricanes Iota and Eta.
A specialist in public spending explained that the comparison of the 2022 figure with what was initially budgeted for this 2021 and the closing projection of this year is valid, taking into account that public spending this year was affected by two atypical factors: resources for the reconstruction of areas affected by cyclones and economic recovery from the effects of the pandemic.
In this context, what do the main public spending numbers say for next year? What should state workers expect regarding the wage adjustment? And the municipalities? Will there be hiring in the State? These are the main numbers:
1. Main macroeconomic assumptions
After a 6 percent growth this year, by 2022 Daniel Ortega’s regime expects an expansion of 3.2 percent, with an inflation rate of 3.5 percent, according to the draft General Budget 2022. That is, the effect recovery of the economy would be cooling.
The 2022 General Budget project was presented this Thursday by Iván Acosta, head of the Ministry of Finance and Public Credit, who in his introduction continued to blame opponents for the burden that accumulates on the economy as a result of the 2018 riots and that really were caused by state repression that killed more than 328 Nicaraguans.
According to Acosta, although a large part of the losses caused by the hurricanes and the pandemic have been recovered, the damage due to the 2018 riots will still extend until 2023. The dictatorship blamed the “coercive” policies of the United States and its allies for the loss of 27.766 million dollars in the economy, plus almost one billion dollars in damages caused by the hurricanes. In addition, the pandemic has cost public spending 257 million dollars, estimates the Treasury.
2. Expenses budget
But how much does the government expect to spend next year? Specific, the General Budget of the Republic of Egreso next year will amount to 91,802 million córdobas, less than the 105,844 million córdobas that it estimates to close this year, which would imply a reduction in absolute terms of 14,042 million córdobas (13.3 percent).
The projected total expenditure is, however, higher if the figure is compared with the General Budget of the Republic 2021 that was initially presented when it amounted to 81.529 million córdobas, but which later increased to more than 105 billion córdobas , because fresh external resources have been incorporated to improve investment, as well as strong increases in tax collection driven by the economic recovery.
3. Income Budget
Precisely next year, the Government is less optimistic in obtaining external resources and collecting taxes. Because, the General Revenue Budget will amount to 91,542 million córdobas, slightly higher than the 89,682 million córdobas that it expects to close this year, which is equivalent to a growth of just 2.1 percent.
The numbers show a better performance if these are compared with the initial goal of the Executive this year, before the incorporations of recent months, when it expected 80,671 million córdobas, but in the end it was possible to achieve better income through tax collection driven by the recovery of the economy, which allowed tax revenues to grow at a rate of almost 30 percent.
Only in tax collection, the Government estimates 84,092 million córdobas next year, slightly higher than the 83,458 million córdobas that it expects to conclude this year.
The indicator shows a better performance if it is observed that the estimated amount in collection next year is higher than the 75,101 million córdobas that were planned at the beginning of this year, which will imply a growth of 13.1 percent.
4. Donations and loans
A key factor behind the budget this year in spending is in the variables related to loans and external donations, which are expected to flow at a slower pace.
Specifically, Hajando estimates 1,542 million córdobas in non-reimbursable resources, below the 3,057 million córdobas that it plans to close this year and almost similar to the 1,534 million córdobas that it initially expected this year.
Regarding external resources via loans, only 4,611 million net córdobas were budgeted, that is, after the payment of amortizations and other obligations, which compared to what was captured this year is less than the 16,211 million net córdobas and quite similar to the 3,564 million córdobas initially projected.
Despite this, Acosta said that the Government will continue to prioritize social spending, assigning it 52.132 million córdobas, 56.8 percent of total public spending.
The deficit in public spending before donations will be 260 million córdobas next year, below the 16.161 million córdobas estimated at the end of this year and 857.6 million córdobas initially budgeted. This is usually covered with non-repayable loans and resources.
5. Health, Education and ITN Assignments
Among the allocations are the Ministry of Health that next year will receive 19.748 million córdobas, 17.2 percent higher than the initial 2021 budget. The amount, however, is less than the 21,510 million córdobas estimated for the end of this year.
The Ministry of Education was given 15.128 million córdobas, which is slightly higher than the 14.821 million córdobas that the Mined is expected to end, as well as the 14.613 million córdobas that were initially given this year. This would reflect that the portfolio would not grow significantly in either of the two variables compared.
One of the portfolios that next year will have fewer allocations will be the Ministry of Transport and Infrastructure, which this year saw its budget grow because it had to promote the process of rebuilding the roads damaged by the hurricanes of November last year.
Specifically, the MTI will receive 6,749 million córdobas, compared to the 11,518 million córdobas that is expected to close this year. However, the figure is slightly higher than the 5,684 million córdobas initially allocated this 2021.
6. Transfers to city halls, CSJ and universities
One of the expenses that will remain almost unchanged will be transfers to the municipalities. In this sense, the central government is expected to transfer 3,396 million córdobas, similar to the 3,004 million córdobas at the end of this year, which is what was initially planned.
In other words, despite the fact that next year tax revenues will show growth, this will not completely favor the municipalities, from which the Government decided in 2019 to remove the increases that by law correspond to them based on the Municipal Law and that These communes used to improve infrastructure conditions in the communities.
And while the Ortega regime argues that they decided to maintain a policy of prudence in transfers to city halls, by only handing over 4 percent of tax revenues, instead of the 10 that would correspond to them, with which they will be complied with will be the judiciary and universities.
In that sense, it has budgeted for the Supreme Court of Justice 3,672 million cordobas (4 percent of total spending) and for the universities 5,508 million cordobas, corresponding to the constitutional 6 percent.
7. Advance payments to the INSS
Although the Government assures that it will continue to strengthen fiscal spaces to face public spending next year, it does not mention whether it will make adjustments in the social security system, to help improve the position of the Nicaraguan Institute of Social Security.
Of course, the Executive ordered to incorporate in the budget project the advance of two installments of the payment of the historical debt with the INSS. Specifically, the Government will pay 1,076.3 million córdobas to the institute, plus two advanced installments “to support its cash flow deficit problem.” This will imply oxygenating the entity with 1,801 million córdobas, similar to the 1,824 million córdobas this year at the end of the period.
8. There will be salary adjustment in the State and hiring
Also for next year an adjustment in the salary of State workers is scheduled, which unlike this year was five percent, for 2022 it will be 3 percent, which is in correspondence with the annual slippage of the currency. The increase is even for all areas, that is, there will be no differentiated improvements for teachers and doctors.
This year the Executive, in the context of the presidential elections, ordered that from August an adjustment of five percent be applied, which would partially offset two years of freezing the salary of public workers, who were later forced to leave vote and send evidence to their bosses that they went to the polls, otherwise they would be fired.
Regarding the hiring, it is only mentioned that 559 teachers will be recruited for the English area of primary education, as well as distance secondary education teachers and regional coordinators for nutrition programs.
In the case of the Minsa, mention is made of the hiring of 500 people for the Wiwilí Primary Hospital (Jinotega), the Nueva Segovia departmental hospital and for other health establishments in the country.
9. Funds are allocated for municipal elections
One of the powers of the State that will receive the most resources will be the Supreme Electoral Council (CSE), which will raise more money for the municipal elections of the next one, according to the budget project.
Specifically, this power of the State has assigned 1,823 million cordobas, above the 1,180 million cordobas this year, which also served to defray the questioned elections of November 7.
The amount, according to the Treasury, also includes the reimbursement that by law the political parties that participated in the electoral process must receive and orders that the reimbursement amount of parties that go to the 2022 municipal elections be reserved in the 2023 Budget.
10. Public Investment Program
For its part, the Public Investment Program (PIP) will amount to 16,938 million córdobas, which compared to what is expected to close this year there is a reduction, since the current period is estimated to end with 24,531 million córdobas. The figure, however, is higher than 14,359 million córdobas.
The main portfolios will continue to be the Ministry of Transportation and Infrastructure, the Ministry of Health, the Ministry of Education, the Nicaraguan Company of Aqueducts and Sewers, the Ministry of Energy and Mines, among others.
The amount of the PIP is part of the global capital expenditure that the Government budgeted at 19,485 million córdobas, higher than the 16,351 million córdobas at the beginning of this year, but below the 30,619 million córdobas that is projected at the end of 2021 .