Fiscal framework should reach Congress after Easter – 04/04/2023 – Market

The Minister of Institutional Relations, Alexandre Padilha, stated that the proposal for a new fiscal framework should be forwarded to the National Congress next week.

Padilha granted an interview to journalists this Tuesday (4th) to announce the installation of four joint commissions in the National Congress, for the analysis of provisional measures, thus seeking to end the impasse that threatens the vote on proposals of interest to the government.

The minister added that there is an agreement to maintain a timetable for processing the proposal for a new fiscal framework

“AND [há o compromisso de] maintain the priority calendar for the government to vote on the new fiscal framework, the debate is going very well, very positive reception within the National Congress. We believe that after Holy Week the House will already have a definition of the rapporteur, that we can start all the processing within the National Congress of the new fiscal framework”, said the minister.

Padilha said that there is no delay in sending the proposal to the National Congress, considering that it had already been publicly presented on Thursday (30). He said that the Ministry of Finance is in the process of detailing the content.

“The Ministry of Finance is detailing the text, including the impressions [que obteve] in the conversations he had, in the presentation he made, both for the House and for the Senate. The content is there and now the final details are in place”, said the minister.

“I believe that next week we will already have the text forwarded to Congress, so that it can be processed”, he added.

After a long wait and discussion, President Lula’s government presented last week a proposal for a new fiscal framework, to replace the spending cap.

The design was announced at a press conference on Thursday (30) by ministers Fernando Haddad (Finance) and Simone Tebet (Planning and Budget) and by technicians from the Ministry of Finance.

The proposal ensures real growth in expenditure (above inflation) in every year, creates a floor for public investment and relies on the success of a series of measures on the revenue side to manage to deliver the promised improvement in public accounts.

The design maintains the principle of a spending cap, but in a more flexible format. The pace of increase in expenses in each year will be linked to the variation in revenues, provided that it is within the range of 0.6% and 2.5%. These will be the floor and cap of actual increase in spending under the new rule.

Investments, in turn, gain protection against cuts and can be expanded in an extraordinary way, outside the expenditure limit, if the inflow of revenue exceeds the best expectations of the government. The prediction of a minimum level for application in investments meets a political concern of the PT that these expenses are not compressed over time.

The president of the Chamber of Deputies, Arthur Lira (PP-AL), stated that there are conditions for the proposal to be approved by the House in April.