Text includes the withdrawal of Fundeb and the Constitutional Fund of Brasilia from the fiscal rule; must be voted by deputy in July
The Senate approved this Wednesday (June 21, 2023) the fiscal framework of the government of Luiz Inacio Lula da Silva (PT). Now, the text returns to the Chamber of Deputies, as senators have made changes to the rule.
The approval in the plenary of the Casa Alta was by 57 votes against 17 and no abstentions. Earlier, senators also approved the senator’s report Omar Aziz (PSD-AM) for the fiscal rule in the CAE (Economic Affairs Commission).
In plenary, 19 amendments were presented to the text approved earlier in the commission. However, the rapporteur accepted only the one presented by the government, because according to him it would only be an “adaptation” to the text already discussed with the Chamber. There were still 4 highlights to be voted separately until the publication of this report.
The leader of the Government in Congress, senator Randolph Rodrigues (no party-AP), presented an amendment to anticipate the possibility of additional credit in the LOA (Annual Budget Law). The measure came after the Lula government withdrew from changing the inflation reference period for correction in the new fiscal rule, as found by the Power360.
With the amendment, the government gets the space of “approximately” R$ 32 billion, considering Randolfe’s text, through additional credit, which will already be provided for in the budget law.
What the amendment proposes and is now part of the base text is already in line with what the Chamber wantsas found by the Power360. The government had meetings in the early afternoon of this Wednesday (June 21) to decide on this exit. In the morning, I studied ways to resume the desired correction period.
Understand below:
- as the House approved – expense corrected by the IPCA (National Consumer Price Index) from July to June of the year prior to the execution of the LOA;
- what the plateau wanted – correction of expenses by the IPCA from December to November.
The Minister of Planning and Budget, Simone Tebet, already estimated that maintaining the period of correction for inflation in the fiscal framework would lead to an impact of at least BRL 32 billion. The estimate is also in Randolfe’s amendment. Tebet was also on the Senate floor during the vote, talking to congressmen.
Despite the quick approval in the plenary after the analysis in the commission, the vote in the Chamber should only be for the 1st week of July. The government’s plans included approval in the Chamber by Thursday (22.Jul).
However, the bill with constitutional urgency by CARF (Administrative Council of Tax Appeals) locks the agenda of the House commanded by deputy Arthur Lira (PP-AL) from this Wednesday (June 21). O PL 2.384/2023 was presented by the government on May 5. With the urgency, the deputies had 45 days to analyze the text. This deadline ended on Tuesday (June 20). Therefore, projects that have not already been presented cannot be included in the agenda.
CAE PROCEEDINGS
Senators made 3 important changes in relation to the text that was approved in the Chamber of Deputies. Fundeb, the Constitutional Fund of the Federal District and spending on science, technology and innovation were removed from the fiscal framework.
Another point that was included in the text was the creation of a Fiscal Modernization Committee. The institution of the organ is an idea defended by the TCU (Union Court of Auditors) and by the Ministries of Finance and Planning.
During the discussion in the committee, Aziz also responded to the request of Senator Oriovisto Guimarães (Podemos-PR), to allow the privatization of state-owned companies as a way to increase revenue. In the report, Aziz rejected the amendment, but backtracked during the session on Tuesday (20.jun).
“This is not a government that is going to privatize anything, but if your Excellency wants it, I will accept your amendment, without any problem.”, said Aziz.
In this Wednesday’s session (June 21), the senator presented a new version of the report, with the Oriovisto amendment accepted. It was the only change made after the CAE discussion.
Senator’s request Hope Amin (PP-SC), to withdraw defense spending from the fiscal rule was not accepted.
Here are the full report (295 KB) and the vote complement (155 KB).
CHANGES TO THE TEXT
In the House, Deputy Claudio Cajado (PP-BA), the text’s rapporteur, included Fundeb (Fund for the Maintenance and Development of Basic Education and the Valuation of Education Professionals) within the growth limit of expenses determined by the new rule.
In the original proposal sent by the government, the fund was outside the new ceiling. The inclusion was criticized by congressmen on the grounds that the rule could harm investments in education and hinder improvements in the sector.
Cajado also included the Constitutional Fund of the Federal District in the limit. The FCDF represents around 40% of the DF’s budget allocation in 2023 – R$ 23 billion of the total budget of R$ 57.4 billion.
The fund is fed with transfers from the federal government – that is, funded by all states of the federation. It was established by the Federal Constitution of 1988, to fund the organization and maintenance of the Civil, Military, Penal and Fire Brigade Police and financial assistance to the DF for the execution of public services. Transfer values are adjusted annually by the variation of RCL (Net Current Revenue) of the Federal Government.
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