Guedes denied that the payment of the precatório is a “default”: “I owe it, I do not deny it; I’ll pay when I can, ”he said. Photo: Edu Andrade / Ascom / ME
The federal government is studying the presentation of a constitutional amendment proposal (PEC) to allow the Union to pay in installments the payment of court orders – debts which are no longer subject to appeal, since they have already passed by all judicial bodies. In practice, the government wishes to postpone a compulsory expenditure which consumes a large part of the budget, and which should increase considerably with monetary corrections.
The measure has not yet been officially presented. But behind the scenes, it is seen as a kind of temporary containment of spending on these debts, which could generate a margin of around 40 billion reais in the 2022 budget. Has been dubbed “Auxílio Brasil”, which is expected to replace Bolsa Família, in addition to other actions.
President Jair Bolsonaro (no party) has already signaled his intention to increase the average benefit that will be paid to “at least” R $ 300 – today the average amount is close to R $ 200. The pledge to increase the amount would generate an account for the government of at least R $ 50 billion per year. The economic team plans to launch the social program in November.
To approve an amendment to the Constitution, as the government wishes, it takes the votes of 308 deputies and 49 senators in the National Congress, with two ballots in both chambers.
Court orders could reach BRL 90 billion in 2022
In 2022, an election year, the precarious in the federal government could reach 90 billion reais – far more than the 55 billion reais in 2021.). At the other extreme, court orders of up to R $ 66,000 – judgments considered to be of low value – will be paid in full, without payment in installments.
One of the federal government’s commitments, in the order of billions of reais, is linked to Fundef, now replaced by the Fund for the maintenance and development of basic education (Fundeb). An attempt to divide up these resources must be rejected by the category of educational professionals.
Information made public reveals that the Union is also studying the creation of an endowment fund with resources from other areas, such as assets, to pay for court decisions outside the expenditure ceiling.
Contrary to what happens in the federal government, in which the precatoria – debts that can be dealt with for decades by justice – must be paid before the end of the year following their issuance, the payment of debts in several times is a common practice in states and counties. . Entities can do this in cases where payment of court decisions compromises the provision of basic public services to the population.
Fiscal snowball, maneuver, pedaling: expert reaction to the proposal
The measure prepared by the government is seen by some economists as a “flaw” and even “budget pedaling” – a practice of deferral of payments which served as the motive for the dismissal of former President Dilma Rousseff (PT).
Faced with the already high public debt, the “maneuver” could become unsustainable in the long term, signaling that the government should not honor its debt commitment. For other analysts, however, the intention not to cap such spending is legitimate, as it is “unpredictable.”
Paulo Guedes, Minister of the Economy, says it is not a “fault”. “I have to, I do not deny it; I will pay as soon as I can,” said the incumbent in an interview with Poder 360 on Tuesday (3). Asked about the significant increase in debt, he said: “I don’t know if we slept there. Maybe not everyone had the capacity to control themselves.”
The proposal to send the PEC was discussed on Monday (2) between the presidents of the Senate and the House, respectively Rodrigo Pacheco (DEM-MG) and Arthur Lira (PP-AL) and the ministers Paulo Guedes, Flávia Arruda (secretary of government), João Roma (Citizenship) and Ciro Nogueira (Casa Civil).
“We will make efforts towards this solution, with particular emphasis on the fact that the needy population must be assisted with a minimum income that minimizes hunger and poverty in Brazil,” Pacheco wrote on his Twitter profile.
In a statement, the Supreme Court (STF) said that the “need for conciliation so as not to harm public funds was discussed in a conversation between Minister Luiz Fux, President of the Court, and Minister Paulo Guedes” . to be defined and informed to society ”.
To journalists, Arthur Lira denied having discussed with members of the government that the value of the new Bolsa Família will be R $ 400, and that, in addition, the possibility of including the advantage in a PEC or exceeding the cap spending .
“We do not want to break the ceiling and Brazil cannot default. There was no question of R $ 400, there is no question of Bolsa Família in the PEC, there is no question to break the spending limit, “said the Speaker of the House.
Funding for Bolsa Familia
The government has invested in various strategies to be able to finance the new social program, but how the Union will finance the resources without exceeding the expenditure ceiling is still an unanswered question among specialists and economists.
One of the strategies, indicated by the Minister of the Economy, Paulo Guedes, is to buffer the resources of the taxation of dividends, provided for in the reform of the income tax, and to direct them towards the program.
A bill sent by the executive to the National Congress makes an exception to the budgetary responsibility law (LRF) and modifies the budgetary orientation law (LDO) of 2021, allowing the government to commit resources still under discussion to direct them to a social program. That is, even before the funds are obtained.
The idea is that the resources resulting from the reform of the income tax – which, if approved, should tax the distribution of dividends, currently exempt – at 20% – support the new social program which will be launched by the federal government. In practice, the legislative proposal amends the law to allow expenditure related to income transfer programs to “fight extreme poverty and poverty”, such as the new Bolsa Família, to be considered as compensation projects that are still ongoing in Parliament.
Another strategy tried by the federal government to finance the new social program was to tie the resources of the capitalization of Eletrobras to the initiative.
The MP 1 031, already sanctioned by the president, establishes that from 2023, when the loans and the financing of Itaipu (which will not be privatized) will have to be repaid, 25% of the possible financial surplus of the Binational plant will be allocated to the unspecified “federal social program”.
Although seen by many interlocutors as a strategy by President Jair Bolsonaro’s government to build political support for the 2022 elections, the government also needs to boost social assistance to comply with a STF ruling.
In April this year, the Court ruled that the Union must comply, from 2022, with Law 10835/2004, approved 17 years ago, but never regulated. The STF decision determines an unconditional basic income transfer policy for the strata of the Brazilian population in a situation of vulnerability (extreme poverty and poverty). The law is drafted by former senator and current São Paulo councilor Eduardo Suplicy (PT).