Estimate is by economist Felipe Salto; new item cites the fiscal rule to shield part of the 2024 Budget spending
The rapporteur of the LDO (Budget Guidelines Law), deputy Danilo Forte (União Brasil-CE), included a device that could lead to a reduction in the preventive blockade ceiling in the 2024 Budget from R$56 billion to R$22.3 billion. The excerpt is in paragraph 18 of article 71, which deals with expenses that “will not be subject to budgetary and financial limitations”.
There is mention of points in articles 4 and 5 of the new fiscal rule, which are related to the correction of the expenditure limit due to the variation in accumulated inflation in the 12 months ending in June 2023 and the real growth in expenditure of 0.6% to 2 .5% per year.
The new estimate is from Felipe Salto, former secretary of Finance and Planning of São Paulo and chief economist at the brokerage Warren Investments.
“The changes promoted in the text of the LDO project will lead to a contingency of R$ 22.3 billion, according to my calculations. Due to the supplementation that will be made to cover expenses linked to inflation at the end of 2023, this number could rise a little more, reaching something like R$28.1 billion”declared to the Power360.
The value is close to the estimate of the Minister of Finance, Fernando Haddad. On November 17, he stated that the blockade could be R$23 billion next year to meet the target of zero primary deficit.
Salto criticizes the inclusion of the section in the LDO. “The limitation of the contingency is worrying, as it will leave the government with fewer instruments to improve the deficit next year. Furthermore, it seems to me that it contradicts the law of the framework itself, in which the real variation floor of 0.6% should be applied to the spending limit, and not to the expenditure itself”he stated.
O Power360 sought the assistance of deputy Danilo Forte to obtain a position on the inclusion of the item. Here’s the answer: “The rapporteur’s position is that the contingency reservations provided for in the LDO must comply with the rules provided for in the fiscal framework.”
The Ministry of Finance was also contacted, but said it would not comment on the matter.
QUESTIONS ABOUT LIMIT
Forte even rejected the amendment (here is the complete in PDF – 49 kB) that limits blocking in the Budget in 2024. The suggestion, presented by the leader of the Government in Congress, senator Randolfe Rodrigues (no party-AP), claimed that the expenditure contingency for next year would not prevent real spending growth of at least 0.6%, even if it made the primary result target unfeasible.
This thesis is defended by the Ministry of Finance. Even with a different wording than the one proposed by the congressman, Forte’s action may reflect the wishes of the economic team.
On Thursday (Dec 7), Randolfe minimized the rejection of the amendment and said that he feels satisfied by the parameters adopted by the rapporteur.
“I do not interpret that the amendment was rejected. I understand that it was received differently. We approved a countercyclical rule. If the minimum growth band is 0.6%, it is clear, in our interpretation, from the Ministry of Finance and the government, that the maximum contingency will be R$ 23 billion”, he declared.
The senator’s understanding is based on the provision inserted by Forte. According to Randolfe, the president’s government Luiz Inácio Lula da Silva (PT) may consult the TCU (Federal Audit Court) in January 2024 if the doubt about the contingency ceiling persists after approval of the LDO.
CHANGES IN OPINION
The expectation is that the text will be voted on on Tuesday (Dec 12). According to the proposal, the government will have to commit all mandatory amendments in the 1st half of the year. The information was anticipated by Power360.
Payment, in turn, must be made by December. There will also be an obligation for transfers to health funds to be made in the 1st semester. Here’s the complete of the report (PDF – 10 MB).
The text establishes that each congressman will have the autonomy to allocate amendments to the works of the new PAC (Growth Acceleration Program). Previously, there was no provision for deputies and senators to be able to allocate resources to the program.
The rapporteur also changed the preventive blockade, which would take place based on parliamentary amendments. Now, the planned contingency will apply equally to resources from the Legislative and Executive branches.
Other changes were also made, such as the inclusion of priority actions to encourage the energy transition. The text also provides for the creation of exclusive service rooms for victims of violence in police stations throughout Brazil.
In the area of education, Fundeb (Basic Education Development Fund) will be used to complement the purchase of uniforms, lunches and school transport so that municipalities do not have to bear these expenses. The project also proposes a national policy for children with ASD (Autism Spectrum Disorder).
Of the 2,272 amendments presented to the text, Forte fully accepted 100 suggestions and another 1,181 partially.
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