Ten keys to understanding how Ortega sees the economy in 2022 through next year’s general budget were revealed this Thursday
After several weeks of keeping it on the shelf, Daniel Ortega’s regime on Thursday released the content of the republic’s draft general budget for next year, which reveals that after closing 2021 with a significant increase in public spending and investment, it has reduced the budget for 2022. For both purposes when compared to the closing figures for the budget This year, but there is an increase if compared with the public spending initially planned in the current year.
In its draft 2022 budget, the government made two comparisons. In the first place, it compares the budget amounts for the coming year in relation to the planned amounts for this year, and in the second case, it is about the updated budget allocations, which include resources that have entered the state through external resources and higher taxes. Gather to attend the pandemic and rebuild Hurricanes Iota and Eta.
A public spending specialist explained that comparing the 2022 figure with what was initially budgeted for 2021 and the final forecasts for this year is correct, considering that public spending this year was affected by two atypical factors: reconstruction resources. Of the areas affected by hurricanes and economic recovery from the effects of the epidemic.
In this context, what do the key public spending figures say for next year? What should state workers expect in terms of a wage adjustment? And what about the municipalities? Will there be employment in the state? These are the key numbers:
1. The main assumptions of macroeconomics
After 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 for 2022. That is, the effect of the recovery of the economy will be calming.
The draft general budget for 2022 was presented on Thursday by Ivan Acosta, head of the Ministry of Finance and Public Credit, who at his foreword continued to blame opponents for the burden on the economy as a result of the 2018 riots that were already so. Due to state repression that killed more than 328 Nicaraguans.
According to Acosta, although much of the losses caused by hurricanes and the epidemic have recovered, the damage from the riots in 2018 will continue into 2023. The dictatorship blamed the “coercive” policies of the US allies for the loss of $27.766 million in the economy, in addition to Nearly a billion dollars in damages from hurricanes. In addition, the pandemic has cost public spending $257 million, the Treasury Department estimates.
2. budget expenditures
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 Córdoba, Less than the 105.844 million cordoba it is estimated to close this year, which means a decrease in absolute value of 14,042 million cordoba (13.3 percent).
However, the projected total spending is higher if the figure is compared to the general budget of the Republic 2021 that was initially submitted when it amounted to 81.529 million córdoba, but later increased to more than 105 billion córdoba, because its new external resources were combined to improve investment, as well as strong increases In tax collection driven by economic recovery.
3. Income budget
In the next year specifically, the government was less optimistic about the acquisition of external resources and the collection of taxes. because, The general revenue budget will be 91,542 million cordoba, just above 89,682 million Cordoba expects to close this year, which equates to growth of just 2.1 percent.
The figures show a better performance if compared with the initial goal of the Executive branch this year, before the merger in the past months, where it expected 80,671 million Cordoba, but in the end it was possible to achieve better income through tax collection driven by the recovery of the economy, which allowed revenue growth tax at a rate of approximately 30%.
Just in tax collection, the government estimates 84.092 million cordoba next year, which is slightly higher than the 83.458 million cordoba it expects to close this year.
The indicator shows a better performance if it is noted that the estimated amount for collection in the next year is higher than the 75,101 million córdoba that were planned at the beginning of this year, which means a growth of 13.1 percent.
4. Gifts and loans
A key factor behind this year’s spending budget is variables related to external loans and donations, which are expected to flow in at a slower pace.
Specifically, Hagando estimates 1,542 million cordoba in non-reimbursable resources, less than the 3.057 million cordoba it plans to close this year and nearly identical to the 1.534 million cordoba it initially projected this year.
With regard to external resources through loans, only 4,611 million córdoba were allocated in the budget, that is, after repayment of depreciation and other obligations, which in comparison with what was recorded this year is less than 16.211 million córdoba net and is exactly the same as 3.564 million córdoba. It was initially expected.
Despite this, Acosta said the government will continue to prioritize social spending, as it has allocated 52.132 million cordoba, or 56.8 percent of total public spending.
The deficit in public spending before donations will reach 260 million córdoba next year, lower than the 16.161 million córdoba estimated at the end of this year and the 857.6m córdoba initially budgeted. This is usually covered by non-repayable loans and resources.
5. Tasks of health, education and ITN
Among the allocations is the Ministry of Health that next year will receive 19.748 million Cordoba, 17.2 percent more than the initial budget for 2021. However, the amount is less than the 21.510 million Cordoba estimated at the end of this year.
The Ministry of Education awarded 15.128 million córdoba, slightly higher than the 14.821m córdoba mining is expected to end, in addition to the 14.613m córdoba awarded initially this year. This would reflect that the portfolio would not grow significantly in either of the two variables compared.
Among the governorates that will have less allocations next year will be the Ministry of Transport and Infrastructure, which this year witnessed an increase in its budget because it had to promote the process of rebuilding roads damaged by the hurricanes of November last year.
Specifically, MTI will receive 6,749 million Cordoba, compared to the 11,518 million Cordoba that is expected to close this year. However, the number is slightly higher than the 5,684 million Cordoba initially allocated for 2021.
6. Transfers to town hallsAnd CSJ and universities
Transfers to municipalities will be among the expenditures that will remain virtually unchanged. In this sense, the central government is expected to transfer 3,396 million Cordoba, similar to the 3,004 million Cordoba at the end of this year, which was initially planned.
In other words, despite the fact that tax revenue next year will show growth, this will not fully serve the municipalities, from which the government decided in 2019 to remove the increases that correspond to them by law based on the Municipal Code and that these communes are used to improve infrastructure conditions in communities.
And while Ortega’s regime argues that they decided to maintain a policy of prudence in transfers to mayors, by providing only 4 percent of tax revenue, instead of the ten that would agree to them, compliance with which would be eliminated. and universities.
In this sense, the budget of the Supreme Court of Justice allocated 3,672 million Córdoba (4% of the total expenditure) and for universities 5,508 million Córdoba, constitutionally equivalent to 6%.
7. Advance payments to the institute
Although the government stresses that it will continue to strengthen fiscal spaces to meet public spending next year, it did not say whether it will make adjustments to the social security system, to help improve the position of the Nicaraguan Institute of Social Security.
Of course, I ordered the executive branch to include in the budget draft an advance of two installments of the historical debt repayment with the National Institute of Statistics. Specifically, the government will pay 1,076.3 million córdoba to the institute, plus two advance payments to “support the cash flow deficit problem.” This means supplying the entity with oxygen with 1,801 million Cordoba, similar to this year’s 1,824 million Cordoba at the end of the period.
8. There will be a salary adjustment in the country and appointment
It is also planned to adjust the salaries of state employees for the next year, which, unlike this year, was five percent, and for 2022 will be 3 percent, which corresponds to the annual slip of the currency. The increase is even for all areas, that is, there will be no differentiated improvements for teachers and clinicians.
The executive branch this year, in the context of the presidential election, ordered the implementation of a five percent adjustment from August, which will partially compensate for two years of freezing the salaries of public officials, who were later forced to leave the vote and send evidence to their superiors that they went to the polls, otherwise they will be expel them.
Regarding recruitment, it is only mentioned that 559 teachers will be recruited in the English Language District for Primary Education, as well as Distance Education Teachers and Regional Coordinators of Nutrition Programs.
In the case of Mensa, it was indicated that 500 people were employed in the Olivia Hospital (Ginotega), the Nueva Segovia Hospital, and other health institutions in the country.
9. Allocate funds for municipal elections
One of the state authorities that will receive more resources will be the Supreme Electoral Council, which will raise more funds for municipal elections for the upcoming elections, according to the draft budget.
Specifically, this state power allocated 1,823 million Córdoba, over 1,180 million Córdoba this year, which also served to defray the costs of the November 7 elections in question.
The amount, according to the Treasury, also includes the reimbursement that political parties that participated in the electoral process must, by law, receive and orders to withhold the reimbursement amount for parties that will go to the 2022 municipal elections in the 2023 budget.
10. Public Investment Program
For its part, the Public Investment Program (PIP) will reach 16,938 million Cordoba, compared to what is expected to close this year, there is a decrease, as the current period is expected to end with 24,531 million Cordoba. However, the number is higher than 14,359 million Cordoba.
The main ministerial portfolios will remain the Ministry of Transport and Infrastructure, the Ministry of Health, the Ministry of Education, the Nicaraguan Canal and Sanitation Corporation, the Ministry of Energy and Mines, among others.
The amount of PIP is part of the global capital expenditure budgeted by the government of 19.485 million córdoba, up from 16,351 million córdoba at the beginning of this year, but lower than the 30.619 million córdoba projected at the end of 2021.