Front of Congress: Government expects microeconomic reforms to pass by 2022, but even they can be a challenge | Photo: Marcos Oliveira / Senate Agency
The federal government is ending 2021 with a focus on 2022. Attention will naturally be turned to the electoral calendar. But the Palácio do Planalto also hopes to vote on and endorse certain economic agendas in Congress, especially micro-reforms such as sectoral regulatory frameworks.
Major reforms, such as administrative and fiscal, are officially treated as priorities. But behind the scenes, government supporters admit that the two are unlikely to advance in an election year.
In the home stretch of 2021, with the approval in Congress of the PEC dos Precatórios, the new law on foreign exchange (PL 5387/19), the new law on cabotage, known as “BR do Mar” (PL 4199 / 20) and the regulatory framework for railways (PL 3754/21), the government has succeeded in certain programs considered as priorities by Planalto.
Others, on the other hand, are still stagnating, such as PL 591/21, the privatization of Correios and PLP 11/20, which changes the ICMS rules on fuels. Despite the government’s priority given to both, agendas may have more difficulty to be addressed in 2022 due to the political and electoral challenges the government will face in Congress in an election year.
The Senate, where the two bills are under consideration, has been the chamber where the government has the most difficulty in pushing forward its proposals. The President of the Chamber, Rodrigo Pacheco (PSD-MG), is a pre-candidate for the Presidency of the Republic.
What projects does the government want Congress to approve in 2022
In addition to the privatization of Correios and the change of the ICMS rules on fuel, other proposals are being treated as a priority by the economic team and by Planalto:
Electricity sector framework (Bill 414/2021) Legal framework for reempreendedorismo (PLP 33/20) Legal framework for PPPs, public-private partnerships (PL 7063/17) The Infrastructure Debentures project, which creates new financial instruments for project infrastructures (PL 2646/20).
In addition to these guidelines, other projects are considered relevant by Planalto, according to information obtained by Gazeta do Povo:
PL 4728/20, which deals with joining the Special Fiscal Regularization Program (Pert), PL 4728/20, PL 6299/02, which facilitates the release of new pesticides and renames substances as pesticides. PL 2633/20, which deals with regularization of land tenure. PL 2159/21, which deals with the new law on environmental licensing. PL 3179/12, which regulates home education. PL 3227/21, which modifies the Marco Civil da Internet. 490/07, which modifies the status of the natives. and establishes that indigenous lands must be delimited by law. PL 191/2020, which regulates mining on indigenous lands.
Structuring reforms are unlikely to start in 2022
Structuring reforms, mainly administrative and fiscal, continue to be formally treated as a priority by the government. But they are on a list of “future panoramas” – which means even the government doesn’t think they can move forward in an election year.
The administrative reform, the proposed amendment to the Constitution (PEC) 32/2020, tends to remain locked in the plenary of the House. It is the same for the tax reform envisaged by the PEC 110/19, which is in the Senate; for the bill creating the Contribution on Goods and Services (CBS), a law unifying the PIS and the Cofins, which is currently being examined in the Chamber; and the reform of the Income Tax (IR), PL 2337/21, which is in the Senate.
“The tax reform that I fought so hard to get out of, I don’t think it will come out anymore. CBS cannot come into being until PEC 110, unless a very small constitutional change is made. in case the PEC is not approved. the form, I do not believe that [as propostas] move forward “, deplores the deputy Alexis Fonteyne (Novo-SP), president of the Mixed Parliamentary Front for a Competitive Brazil.
Government House Leader Ricardo Barros (PP-PR) previously denied in Gazeta do Povo that structural reforms would be put aside and said they would be resumed in 2022. He understands that it is possible to resume structural reform. on the agenda at the start of the legislative year, in February, and keep pace until April, the deadline for the party counter for electoral disputes.
“As the membership deadline is April 4, we will be able to vote early next year for questions, as the election period begins when the lists and affiliations are set. We will make an effort to vote,” he said. declared Barros.
At the time, the head of government guaranteed that the treatment of micro-reforms would be independent of macro-reforms. “Directions such as milestones in the electricity sector, railways and PPPs are priorities that are already being discussed in the House. We intend to vote on these agendas whatever the reforms ”, stressed Barros.
Despite the Head of Government’s conviction to resume structural reforms in 2022, the chances that issues such as administrative and fiscal reforms will move forward and be approved in both houses of Congress are almost nil. The emphasis on the electoral calendar usually increases the unpopularity of structural reforms and makes them almost impossible to pass in an election year. And even the micro-reforms may not pass.
Novo House leader Paulo Ganime (RJ) is enthusiastic about macro and micro reforms, but understands that not all new regulatory frameworks will have a chance to be approved in 2022. “We want to move forward in these regulatory agendas, but not all will [avançar]. We don’t even have time, “he reflects.
“Let’s say that we manage to get all the rapporteurs out of their opinion and that the files are ready to be voted on. (…) We can vote on something early next year, but there is little time to approve everything in the two chambers and take the sanction. Hope we can move forward at least three or four [microrreformas], but it will not be easy, ”Ganime analyzes.
Social agendas may have some priority in Congress
In addition to economic agendas, other issues that may be put to a vote in Congress are specific proposals focused on social programs. This is what governments and parliamentarians traditionally bet on during election years to, to some extent, increase their popularity.
The government has bet on the PEC dos Precatórios and on the provisional measure (MP) 1.061 / 2021, which establishes the Auxílio Brasil program, to end the year with its already structured social program. But defending proposals that will increase the well-being of the poorest is a scenario that has not been ruled out by political scientist Lucas Fernandes, policy analysis coordinator at BMJ Consultores Associados.
“The government will try to go all or nothing on the populist agenda. AGU [Advocacia-Geral da União] already entered the STF [Supremo Tribunal Federal] with the demand to be able to increase spending without exceeding the spending limit due to the elections. The government will continue to play for populist measures, but it will not be able to approve anything substantial on the economic agenda, ”Fernandes said.
The consultant refers to a Supreme Court ruling that could allow the government to clear the queue of benefits that will receive assistance from Brazil and increase the value of the benefit without incurring the limitations of the law election, which prevents the increase in this type of expenditure from January 1, 2022.