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Brazil central bank asks government for 20% budget increase this year By Reuters

© Reuters. FILE PHOTO: A general view of the Central Bank headquarters building in Brasilia, Brazil February 14, 2023. REUTERS/Adriano Machado/File Photo

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By Bernardo Caram

BRASILIA (Reuters) – Brazil’s central bank has asked the government for a 20.4% increase in its 2024 discretionary budget, a letter seen by Reuters on Tuesday showed, arguing that a lack of funds would bear operational and security risks.

The monetary authority sent the letter to Brazil’s Planning Ministry in March requesting an additional 66.6 million reais ($13.2 million) in the discretionary part of its budget, which the government is not legally obliged to pay, as that would allow it to “properly maintain its operations”.

The bank noted that an insufficient budget could increase its exposure to operational risks and even affect its ability to organize and participate in meetings of the G20 group of the world’s largest economies, which Brazil is presiding over this year.

The central bank’s discretionary budget of 326.1 million reais for 2024 is lower than last year’s amount of 360.7 million reais.

The Planning Ministry, which decides over demands for extra money along with three other ministries, did not comment on the matter, while the central bank did not respond to a request for comment.

The central bank’s letter comes as the monetary authority and its governor, Roberto Campos Neto, try to gather congressional support for a bill that would grant it financial autonomy, after it gained operational autonomy in 2021.

Finance Minister Fernando Haddad, however, has already said he disagrees with parts of the bill.

The request for extra money also follows the government’s move to block 2.9 billion reais in expenses this year to comply with the spending cap outlined in its new fiscal rules.

The central bank has recently been grappling with stoppages as employees campaign for career improvement, often delaying the release of key economic indicators. The extra money requested by the bank, however, does not include the workers’ wage demands.

($1 = 5.0498 reais)

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