07/07/2024 – 9:30
The national secretary of Planning at the Ministry of Planning and Budget, Virgínia de Ângelis, states that the spending review agenda currently under discussion by the federal government needs to make clear the objectives of the spending cuts sought by the Executive Branch. According to her, if the process is not planned and delimited, the new fiscal space runs the risk of being occupied by more parliamentary amendments.
“When you review spending, it is not simply to create fiscal space. What is it creating space for? If it is to pay debt service, that has to be very clear,” says Virgínia in an interview with State. “If we are going to reallocate government priorities, what are the priorities? If we are not clear about this, we may have a new increase in the percentage of individual mandatory amendments, for example.” Currently, more than 90% of primary expenses are made up of mandatory spending. Of the remaining amount, almost a third is in the hands of Congress.
A career civil servant at the Federal Court of Auditors (TCU) and who has been the national secretary of Planning for two months, Virgínia believes that the amounts allocated by deputies and senators to electoral strongholds have taken on a disproportionate dimension. The Multi-Year Plan (PPA) 2024-2027, led by the secretary, seeks to reduce these distortions. The medium-term budget planning instrument will provide information on how federal public resources, including amendments, are complying or not with the indicators and goals created by the project.
The government has published a decree regulating the management of the PPA. What practical changes does this instrument bring in relation to budget monitoring?
We changed the system (for reporting by ministries). Previously, this monitoring was done twice a year, when the agencies responsible for the programs entered the goals into the system. Now, it will be open most of the time, and the ministries’ target areas will also have to participate in meeting these goals, achieving results and delivering, based on the resources applied. We want to change the mindset.
Is it important to bring Congress to the discussion table, given the increase in parliamentary amendments?
Parliamentary amendments are legitimate and occur all over the world. However, in recent years, in Brazil, they have taken on a disproportionate dimension and, at times, even with mechanisms that make transparency and accountability impossible, as in the case of the so-called Pix amendments. When you don’t have a well-planned plan, it becomes easier to carry out this type of action, because there is no instrument to monitor it. We are building this reference, a criterion so that we can, in fact, say: this does not follow the plan. Today, Congress only allocates (resources); it is not responsible for the result.
Would the way forward be to increase transparency, pointing out what does and does not generate results?
Qualifying the entire allocation process, with special attention to amendments, is what we seek to do with the reformulation of the PPA and its strengthening. Today, we have talked a lot, for example, about reviewing spending, generating efficiency and opening up fiscal space for priority public policies. But what are the priority policies? What guarantee do we have that this opening up of fiscal space will in fact be directed towards priorities and not, for example, towards more mandatory amendments?
So is there a risk that the budget space created by the review will turn into more amendments?
When you do the review, it is not simply to create fiscal space; it is to create fiscal space for what? If it is to pay debt service, this has to be very clear. If it is to reallocate to government priorities, what are those priorities? If we are not clear about this, we may have a new increase in the percentage of individual tax amendments, for example.
Is the government clear about the ‘why’?
Yes, because we already have clearer priorities, such as the Ecological Transformation Plan and the fight against hunger. The PPA is not perfect, it needs to be improved as well. But the government can have clarity on the priority areas, it has the tool.
What is your vision on reviewing the health and education floors?
The discussion must go beyond the fiscal aspect. If we are going to decouple (health and education spending from revenue), why should we decouple it? The fiscal aspect is extremely important; we need to decouple it to allow flexibility in budgetary and financial management and to enable compliance with the new framework, the primary result target… Now, when we decouple, where does that go? When we talk about reviewing spending, the quality of spending, it is what you deliver to society, what results you generate. We know that the literature also points to this: budgetary decoupling is very harmful, it makes allocation (of resources) difficult. So, this discussion is necessary, but it has to be broader, complemented by other aspects.
The information is from the newspaper The State of S. Paulo.
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