Federal Senate approves PEC of court orders

Plenary of the Senate: the PEC of precatório will hardly be approved without modifications. The government wants to approve the issue by December 2. | Photo: Jefferson Rudy / Senate Agency

The plenary of the Federal Senate approved, this Thursday (2), by 64 votes in favor, 13 against and 2 abstentions, the basic text of the proposed amendment to the Constitution (PEC) n ° 23/2021, now known as the name “PEC of court orders”. At least 49 favorable votes were necessary for its approval in the 1st round. Senators are currently analyzing the highlights of the case. The proposal is expected to be considered in the 2nd round today.

In order to ensure that the resources that must accompany the PEC are not used for purposes such as the rapporteur’s amendments, the Senate has linked the entire fiscal space open to the sub-ceiling for the payment of court orders to Auxílio Brasil and social security. The change allowed more support for the proposal.

With the changes to the text, it will have to return to the Chamber of Deputies, where it was already approved on November 9. After further approval by MPs, the PEC can be enacted by Congress – there is no presidential sanction for constitutional amendment.

Prepayment in installments

The PEC is postponing the payment of part of the 89.1 billion reais of court orders that the government is expected to pay next year, and at the same time modifying the rule for correcting the expenditure ceiling, the main budgetary anchor of the government. country. These measures, combined, are expected to allow additional spending of more than R $ 106 billion in 2022. The measure could also allow fiscal space of up to R $ 15 billion in the 2021 budget.

The approved text also guarantees priority for the payment of court decisions qualified as “maintenance” by nature.

Brazil Help

It is with this space that the federal government can finance the Auxílio Brasil program, which replaces Bolsa Família. President Jair Bolsonaro (PL) would like to pay a ticket of at least R $ 400 to beneficiary families and increase the reach of the program so that 17 million people start receiving the resource.

With the approval of the CEP, the new government assistance program will receive a larger contribution. The proposal also makes aid permanent and links the open space in the budget to spending of a social nature. The remainder will be used to readjust pension benefits and other expenses that were underestimated in the budget.

From 2023, any increases in Auxílio Brasil’s budget will have to comply with the Fiscal Responsibility Law (LRF), contrary to what the initial text provided for. The provision establishes that any creation of permanent expenditure must be offset by a reduction in fixed expenditure or an increase in income. For next year, however, the CEP makes the program permanent and, at the same time, exempts the federal government from presenting financial compensation to fund the program – thereby bypassing the LRF requirement.

Fund resources

The approved text also removes Fundef’s court orders – around R $ 16 billion – from the spending cap. Nevertheless, the installment payment of these debts will be maintained: 40% of Fundef’s court decisions will be paid by April 30, 2022, 30% by August 31, 2023 and the remaining 30% by December 31, 2024.

At least 60% of the amount owed by the Union – around R $ 9.6 billion – must be transferred to education professionals, including retirees and retirees, in the form of allowances. With the change, the government will be able to pay more court orders up to the limit of around R $ 40 billion.

Settlement of accounts with creditors

The approved CEP also requires the federal government to regulate, for a period of 90 days from early 2022, the settlement of accounts with holders of court-ordered debt to the federal government. – benefit from an exemption from payment of legal deadlines.

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