Cajado talks about reversing changes in the Senate framework – 06/26/2023 – Market

The rapporteur for the fiscal framework in the Chamber, deputy Cláudio Cajado (PP-BA), criticized this Monday (26) the version of the text approved in the Federal Senate, with more exceptions to the spending rule, and defended reverting the changes when the text was appreciated again by the deputies.

For him, the senators did not present “technical justifications” to exclude from the fiscal framework the expenses with Fundeb (Basic Education Maintenance Fund), the FCDF (Constitutional Fund of the Federal District) and expenses with science and technology.

The changes were included in the opinion by the rapporteur, Senator Omar Aziz (PSD-AM), and approved by the full Senate. Because of the changes, the text needs to be voted once more by the House, which will have the final word before sending it for presidential approval.

“I will only deal with the matter next week. Until then, nothing will happen. But if it’s up to me, I’ll go back to the content of my report, which was done, for each point changed, with technical justifications”, said Cajado.

Of the three items excluded from the framework, two (Fundeb and FCDF) were already free of the limitation in the government’s original proposal. The Chamber had opted for a tightening of the rule.

According to the deputy, the inclusion of these expenses under the new limit seeks to follow the principle that all expenses that have an impact on the primary result (obtained by the difference between income and expenses) must be within the scope of the rule. This, in Cajado’s assessment, contributes to the sustainability of the public debt and its reduction in the medium term.

“The Senate, unfortunately, decided politically on its amendments, without any support from a technical point of view,” he said.

Cajado also said that he will also analyze the device that allows the federal government to send the PLOA (Annual Budget Law project) of 2024 with about R$ 40 billion in expenses conditioned to the approval of a supplementary credit, next year, to incorporate the effect of higher end-of-year inflation on the spending limit.

The section was included after intense mobilization by the Ministry of Planning and Budget. Minister Simone Tebet went to the Senate floor to negotiate directly with congressmen the incorporation of an amendment presented by the leader of the government in Congress, Senator Randolfe Rodrigues (Rede-AP).

Without this measure, Planning would have to cut up to R$ 40 billion in expenses in the PLOA, which would compromise projects of the new PAC (Growth Acceleration Program) that the management of Luiz Inácio Lula da Silva (PT) intends to launch.

Although the government was successful in articulating it, there is no guarantee of the Chamber’s commitment to maintaining this device.

According to Cajado, the topic will be discussed with leaders of the House and with the mayor, Arthur Lira (PP-AL), before any final decision is taken.

In the original project, the government proposed to update the new ceiling by the index from January to June of the previous year, plus the estimated variation between July and December of the same year. This rule marked out the parameters of the 2024 PLDO (Budget Guidelines Bill), sent in April.

During the vote in the House, Cajado preferred to remove the projection component to prevent overestimated inflation from being used to boost government spending. The correction started to be made by the index accumulated in 12 months until June of the previous year —a model validated by the deputies.

As inflation until June should be lower than the variation until the end of the year, Tebet has already warned that the measure would force the government to cut from R$ 32 billion to R$ 40 billion in current expenditures and investments in the budget proposal to be sent on August 31st.

The text of the framework allows for the difference to be compensated with the opening of new credits over the next year, but this would not solve the political problem of passing the scissors on the various government actions when presenting the Budget —hence the need to condition the expenses.

Senate President Rodrigo Pacheco (PSD-MG) said this Monday that the changes had been discussed with the Chamber of Deputies.

“Dialogue has always existed. the president of Argentina, Alberto Fernández.

“This issue of the constitutional fund, of Fundeb, can be debated in the Chamber and will have our full contribution, because the Senate made these simple alterations”, stated Pacheco.

Collaborated by Thaísa Oliveira