Brazil owes 10.1 billion reais to international organizations, but only reserves 2.2 billion reais – 2/4/2021 – World

Brazil has to pay 10.1 billion reais to more than a hundred international organizations, taking into account the accumulated debts and the commitments planned for 2021. Despite this, the budget proposed by the government has reserved only 2.2 billion reais to entities this year (or 21% of this is needed).

The budget constraint is expected to worsen the default scenario with international entities, which has developed considerably under the government of Jair Bolsonaro (without a party).

The table has generated alerts from Itamaraty, which sees risks of political losses and even sanctions such as loss of voting rights in discussions.

The total payable is the result of R $ 6 billion in debt accumulated until the end of 2020 and an additional R $ 4.1 billion in installments scheduled for 2021.

Debts to international organizations increased by 483% in 2019 and 169% in 2020. Before Bolsonaro, between 2015 and 2018, the average annual advance was 24%.

Figures obtained by Folha show that the number of entities with receivables has also increased. In 2018, there were 10. In 2019, 92. In 2020, 107.

The UN (United Nations) and different branches of the entity such as the ILO (International Labor Organization), WHO (World Health Organization), Unesco (focused on education, science and culture) and FAO (food and agriculture).

There are also regional blocs and organizations (such as Mercosur and the Organization of American States), security (such as the International Atomic Energy Agency) and rapprochement between nations (such as the Community of Portuguese Speaking Countries ).

The list also includes financial institutions and their branches, such as IDB (Inter-American Development Bank) and CAF (Corporación Andina de Fomento).

At the moment, the country’s largest debt is to the New Development Bank (NDB), for which the government has not paid 1.59 billion reais in 2020.

The failure to pay the NDB was the first since its inception in 2014, when the country joined forces with other Brics members for annual contributions to the bank. Brazil, Russia, India, China and South Africa each have a 20% stake in the institution.

The government still has not asked Congress for sufficient resources to settle debt with institutions such as the NDB in its 2021 budget proposal. And it has only set aside 700 million reais, an amount insufficient for them. 1.8 billion reais planned for this year. year (without taking into account the debt of R $ 1.59 billion in 2020).

The lack of payments has generated demands and even threats from entities, including the UN itself.

Chandramouli Ramanathan, assistant secretary general of the United Nations, told Brazil in 2019 that the country’s voting power in the body could be removed.

The sanction is provided for in Article 19 of the United Nations Charter and has never been applied in Brazil in history. At the end of this year, the country paid a minimum amount (just over 500 million reais) and guaranteed the right to vote.

The Ministry of Foreign Affairs says the Ministry of Economy is responsible for payments. However, he emphasizes that the portfolios are working together “to avoid compromising Brazil’s international operations”.

Itamaraty says that the fiscal restrictions in the budget have affected payments to international organizations and that she is drawing the government’s attention to the risks.

“The Ministry of Foreign Affairs regularly reports the potential political damage resulting from the situation of Brazilian contributions to international organizations, including possible sanctions, such as the loss of the right to vote”, specifies Itamaraty.

The Economy Ministry says participation in bilateral talks is something of strategic importance for the country and that it has requested additional appropriations for payments to Congress in 2020, but only part of the resources have been approved. Even so, he says over the past two years he has paid off R $ 3.99 billion in debt, even with the priority on Covid-19.

“Even in the face of budgetary and financial constraints, the ministry makes it a priority to fulfill Brazil’s commitments to international organizations, and will strive to ensure that resources are properly provided for in the annual budget law 2021,” the dossier states. .

The ministry is internally discussing the possibility of a budget transfer of nearly R $ 8 billion for payments this year, according to reports collected by Folha. The goal is at least to reduce total liability.

To this end, an amendment to the 2021 draft budget is discussed. The ministry plans to lift a lock on the text which limits relocations to 20% of other actions of international organizations.

This would transfer more power to the executive branch and would also increase the chances of receiving funds from other agencies interested in the payments as they believe the measure would benefit portfolio policies.

Carlo Cauti, professor of international relations at Ibmec, says default is a budgetary problem that has worsened with the fiscal imbalance since 2015. “Itamaraty itself has fewer resources than in the past because of of the crisis the country is going through, “he said.

For the professor, international institutions tend to avoid sanctions against countries as much as they depend on resources. Therefore, he says the government can count on this to defer its obligations.

One example is the NDB itself, where the Brazilian government lost only part of its voting rights after default. But the reduction amounted to less than 3 percentage points and, moreover, decisions were made by consensus among members – which neutralizes the impact for now.

However, Cauti recalls that various countries have already suffered sanctions for non-payment and that the situation could lead to a loss of prestige with real effects. Among them, the loss of the right to non-permanent seats in strategic global bodies, such as the United Nations Security Council.

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