Fiscal framework: Government wants to speed up analysis in the Senate – 05/25/2023 – Market

Fiscal framework: Government wants to speed up analysis in the Senate – 05/25/2023 – Market

After the approval of the new fiscal framework in the Chamber of Deputies, the government will act so that the text that will replace the spending ceiling has a quick rite in the Senate, preventing the House from making substantial changes.

To save time, allies of President Luiz Inácio Lula da Silva (PT) want the text to go straight to the plenary, without going through thematic committees. The idea, however, suffers resistance from party leaders, including the base.

In addition, the objective of government supporters is to work so that the text does not return for analysis by the Chamber, so that the rule enters into force soon. They also don’t want to risk further modifications.

The Planalto Palace has the support of the President of the Senate, Rodrigo Pacheco (PSD-MG), to accelerate the analysis of the proposal. He foresees that the text will be approved in June by the senators.

“Tomorrow [quinta-feira (25)] at the leaders’ meeting, at 9:00 am, we will submit to the leaders an agreement on procedures regarding this topic. If we can take it directly to the plenary, given the importance of the matter, given a certain pacification that everyone has, we can make this proposal”, he said.

“If eventually there is a need to submit it to one or more committees, we will also attend. The important thing is that during the month of June we can deliver this matter duly approved by the Federal Senate”, continued Pacheco.

The basic text of the framework was approved by the deputies on Tuesday night (23) by 372 votes to 108. The deputies rejected all highlights (suggestions for modifying the text) this Wednesday (24).

Complementary bills require an absolute majority of favorable votes, that is, more than half of the members of each House. This means that the proposal needed at least 257 votes in the House and that it must receive at least 41 votes in the Senate to pass.

The text will replace the current spending ceiling, a rule that limits the growth of expenses to inflation and which is still in effect, although it has been circumvented in recent years.

Minister Simone Tebet (Planning) defends that the text goes straight to the analysis of the plenary of senators.

“As it was a very well-crafted text, exhaustively debated, the rapporteur, in a democratic way, negotiated any alteration, showed it to the Civil House, to the Ministry of Finance, to the Ministry of Planning — and also already, to the leaders of the Senate , was punctually presenting the amendments —, I believe it can go straight to the plenary”, he said.

“Any alteration that the Senate makes can be made within the plenary so that we can, in this case, if there is an alteration, return as quickly as possible to the Chamber”, said Tebet.

Despite the desire, party leaders are pressing for the text to pass through at least one Senate committee — possibly the CAE (Commission on Economic Affairs) — before discussion in plenary.

The assessment is that, even though the text has already been discussed with different interlocutors, the senators have not yet effectively participated in the process.

The message has already been taken to Pacheco by senators from allied parties, such as the MDB and the PDT. Parliamentarians also argue that, even with the analysis by the CAE, it would still be possible to approve the text before the recess.

“The fiscal rule will be appreciated as soon as possible by the Senate. There is already a decision that the rapporteur belongs to the PSD”, said the leader of the government in Congress, Senator Randolfe Rodrigues (AP).

The trend, according to Randolfe, is that the rapporteur in the House is Senator Omar Aziz (PSD-AM), who was president of the CPI of Covid, in 2019. The PSD is the largest party in the Senate, with 16 members.

The fiscal framework was approved in the Chamber without any changes being made to the opinion presented by the rapporteur, Deputy Cláudio Cajado (PP-BA).

There are senators, however, who will try to re-discuss at least two passages that were also the subject of controversy in the Chamber.

One of them concerns the inclusion of the Constitutional Fund of the Federal District, which serves to fund public security agencies in the capital, as well as health and education services.

The text approved by the Chamber determines that, as of 2025, the fund will receive resources in accordance with the rule approved in the framework, which provides that the government transfers up to 70% of the variation in revenue and a maximum of 2.5% above inflation to the year.

Parliamentarians claim that this will generate losses to the fund and impact security in the DF. The rapporteur in the Chamber, however, stated that the fund will not have financial losses. In an interview after the final approval of the text in the House, Cajado defended the criteria used in the fiscal regime.

“What was left out of the base, exceptional, was everything that has budget neutrality and that has no impact,” he said.

“It is not true that the DF government will not be able to pay security and education officials, because it was withdrawn from the fund. It is not true. The same goes for Fundeb (Fund for the Maintenance and Development of Basic Education and the Valorization of Education Professionals).

Senator Izalci Lucas (PSDB-DF) told the Sheet who will re-discuss the issue of the Constitutional Fund of the DF and believes that it may have a chance of approval in the Senate, as it is the so-called House of the Federation — each state has three senators, while the benches vary in the Chamber according to the size of the federation unit.

Another topic that can be debated again is the inclusion of expenditures with Fundeb under the scope of the framework limit. Although the PT itself defended that Fundeb be removed from the scope of the framework, the deputies did not propose changes. The idea is that the same will happen in the Senate.

Government supporters defended the exclusion of Fundeb from the limit on the grounds that education is an investment. The Secretary of the National Treasury himself, Rogério Ceron, said that the decision to include these transfers under the framework could represent a restriction of fiscal space in the medium term.

According to the proposed rule, the increase in the spending limit for the following year must be equivalent to 70% of the variation in revenue in the 12 months accumulated up to June of the previous year, already discounting inflation, provided that the interval from 0.6% to 2 is respected. 5%. In practice, these are the floor and ceiling for advancing expenses, regardless of the country’s economic situation.

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