11/10/2023 – 22:04
To preserve parliamentary amendments in case the government needs to block expenses to meet the fiscal target next year, a group of deputies from the Chamber has studied including in the 2024 Budget Guidelines Law (LDO) report a device that establishes rules and limits for contingency (preventive blocking) of these resources. The idea is still preliminary, but there is a willingness among congressmen for this eventual solution to be constructed in alignment with the Executive itself.
The disbelief of some deputies about the feasibility of closing the gap in public accounts in 2024 only with an increase in revenue has driven behind the scenes a movement to preserve parliamentarians’ resources in a year of electoral dispute. The fear of congressmen, still restricted to a minority group in the House, is that pursuing the fiscal target defined by the Minister of Finance, Fernando Haddad, could result in the government having to promote contingencies. In this case, parliamentary amendments could be penalized.
A 2019 constitutional amendment determines that, in the event of non-compliance with the fiscal result target, the resources allocated to parliamentary amendments “may be reduced by up to the same proportion as the limitation on all other discretionary expenses”.
As part of the contingency rules are defined in the LDO, a different limit or parameter could be included in the report, based on a proportional value to be defined in the opinion that will apply to all discretionary provisions, respecting the text of the Constitution. According to technicians, the expressions “may” and “up to” in the constitutional provision could open a loophole to sew this solution, but the possibilities are still being analyzed.
The warning about preserving amendments has already been made by the LDO rapporteur, deputy Danilo Forte (União-CE). Yesterday, the parliamentarian stated that “repeatedly there is selectivity in the contingency regarding what will be committed, paid and released”. “There is widespread anguish in parliament, because this schedule has not prioritized parliamentary amendments,” he said in plenary.
Among deputies, there is a perception that the Executive has been strengthened through contingencies and, given this, it would be necessary to guarantee even greater empowerment of Congress over the budget. Forte is a defender of this flag. It was he who raised, for example, the suggestion of establishing a calendar for releasing the amendments, in an interview with Broadcast Político in August.
This possibility of creating rules on contingency would be an alternative to the idea of changing the fiscal target. This is because, as the report showed, the hypothesis of changing the zero deficit target now for next year without agreeing with the government, to prevent the amendments from being penalized in 2024, is not supported by Chamber leaders. Haddad has insisted, in public and behind the scenes, on the importance of pursuing the objective set in the framework to signal fiscal responsibility to the market.
In the report, deputies stated that the mission was embraced by Haddad and it is not up to Parliament to change the route in 2023. They recognize, however, that there may be a change in the target next year and that this would already be priced by the market. The political wing of the government is, for example, one of those that advocates that fiscal adjustment be more gradual to avoid a slowdown in economic growth.
To fulfill what it promised, the Executive depends on a series of projects that foresee an increase in revenue, but are still being processed in Congress, such as the taxation of high-income funds (offshore and exclusive), the end of the deduction of Interest on Equity ( JCP) and the change in the ICMS subsidy. There are also “bomb agendas” in Congress that could increase spending.
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