Framework: New version will bring security, says reporter – 06/05/2023 – Market

The indicators that will dictate the pace of growth of expenses under the new fiscal framework in progress in Congress will be set in the text of the complementary bill in order to also be valid for the next governments, anticipates the proposal’s rapporteur, deputy Cláudio Cajado (PP- BA), in an interview with Sheet.

The project presented by Minister Fernando Haddad (Finance) predicts that spending will rise from 0.6% to 2.5% above inflation per year, but these references would only be valid between 2024 and 2027. After that, the choice of parameters it could be done in the LDO (Lei de Diretrizes Orçamentárias) – sent in the first year of each mandate and easier to be modified as it requires fewer votes than a complementary bill.

“I’m bringing [os parâmetros] for the body of the text of the fiscal framework”, says Cajado. “I think this brings security and more reliability.”

The rapporteur also wants to leave in the past the name “fiscal framework” by which the project became known and which he considers difficult to understand. According to him, there is already an agreement to rename the project Sustainable Fiscal Regime.

Cajado also signals that it may make the requirements for compliance with the rule more rigid, with the possible obligation to set aside resources during the year in case of threat to the fiscal target (in the government’s version, the block would be optional), and the creation of eventual correction triggers to rebalance the accounts.

In addition, he is considering modifying the list of expenses that are outside the limit – an analysis that includes contributions from the National Treasury to state-owned companies.

Cajado says that the approval of the new framework could pave the way for the reduction of interest rates and that there is no risk of Congress loosening the project sent by the Executive. According to him, the parliamentarians will approve the proposal regardless of the consolidation of a support base for the government in the Legislative, because no congressman wants the return of the spending cap. “It’s the most important law we’re going to vote on this year.”

What did mr. Can you anticipate changes that will be in the report? The rule is entered [num desenho em que] the beacons and parameters [ficaram] for the LDO. The primary result target you design in the LDO with the goals it [governo] put real growth, 0.6% to 2.5%, which may have the [alta na] expense from 50% to 70% [do crescimento da receita]. What is the change I am making that will be important? Instead of leaving these guidelines and parameters to the LDO, which is legislation that we change a lot here —the average is to change the LDO three times a year—, I am bringing it to the body of the text of the fiscal framework.

Today it sets, already in the project, the goals and parameters for the next four years, but for subsequent periods it could be defined in the LDO. The idea is that now it is fixed for all years? That. It will be inserted in the text of the fiscal framework, with a longer horizon margin.

And would these be the same parameters? It would be the same parameters, because the concept of the fiscal mark pleases me. It’s different from the spending cap, where even with an increase in revenue, you couldn’t spend. What was left went to [abater] debt.

Why are we putting [os parâmetros no texto]? Precisely because you will have a sustainable and secure tax regime, so you won’t have any changes. Then you can say ‘yes, deputy, but you are not prevented from changing’. No, it doesn’t mean you can’t move in the future, four or five years from now. Look, the conditions are better, so this goal of 0.6% to 2.5% can go to 1% and 3.5%. But you change LDO is much simpler than changing the bulge of the law.

It would be more armored then. The concept would be better preserved. I think this brings security and more reliability.

Has this already been negotiated with the benches and the government? I haven’t discussed this with anyone at all. This is the first time that it is having some information about how the text will come. All the text is being worked on according to the suggestions I’m receiving, but I haven’t exposed it to anyone yet.

Of these suggestions, was the issue of parameter safety a relevant point? I felt that everyone agrees with this position. And these beacons, these parameters, I didn’t feel any criticism, [só algumas] very punctual.

The difference between the spending ceiling for this fiscal framework is that you are able to maintain a minimum expenditure, moving the government machinery, ensuring that public policies continue to be implemented, which is what the current government thinks. Public spending for them is synonymous with development. This concept is, for the most part, very well accepted. I think that public power really is an inductor of policies that are important, as long as it has balance and control of the accounts.

Sectors of the PT think that the rule has become too restrictive in terms of spending. And there are economic agents who think it has become too soft. Mr. do you think the parameters are valid? And truth. The PT itself, part of the PT, spoke badly of the government’s project. They think the project is not good. This wing that criticizes did not want to have any parameter, in theory. I wanted to leave things very loose. The government presented parameters, and there were no contributions or suggestions that could improve within the concept of a sustainable fiscal framework.

A recurring criticism is that the framework bets a lot on expanding collections. Mr. Do you feel this criticism in Congress? I’m sorry, but I believe that the government will indeed be able to improve revenue. I trust that a lot. I am waiting for a letter that I made a point of formalizing to the Special Secretary of Revenue, [Robinson] Barreirinhas, [para saber] what are the revenue growth expectations and in which areas. I believe that the government can really improve collection by better monitoring those who are not contributing their taxes. There are several examples, these Chinese sites, sports betting. There is this issue of Carf, the casting vote. There are measures like the ICMS tax incentives. And Minister Haddad told me that, after the fiscal milestone, he will propose some measures. I see space in that. If the government leverages between BRL 100 billion and BRL 120 billion for this year, it will keep the fiscal framework sustainable for a long period.

Can’t Congress interpret this as an increase in the tax burden? No. An increase in the tax burden would be to raise a rate. If you are, for example, charging CPMF again. This Congress rejects.

Carf’s MP met with strong resistance in Congress, and the taxation of purchases from abroad had an enormous negative impact. What guarantees that Congress will actually help with these measures? Does not guarantee. Only with the government, whose base is completely disorganized. The government has no sustainable basis here today to be able to approve any measure.

Even the framework? Change the name, the Sustainable Fiscal Regime… This has an agreement, see? Everyone agreed with this new term. Framework refers to bones, mortal remains. Let’s do something more modern, shall we?

Regarding voting, I trust that this project goes beyond any political-ideological issue. We are making a law for the country. It’s the most important law we’re going to vote on this year. And bringing the balance of public accounts, we will reach the monetary policy, with the drop in interest rates.

The Central Bank said at the Copom that the fiscal framework has not yet been voted on. From the moment we take not one, but several actions, there is no way out, the interest will go down. And if interest rates drop, this government, you can be sure of it, will boost economic growth.

Even so, doesn’t the overthrow of parts of the Sanitation Framework decree generate an alert? No, no, no. Everyone is aware that the country needs a new tax regime. More importantly: if we do not vote on the tax regime, what will prevail? Spending cap prevails. And who wants the roof? Nobody.

The BC cites the uncertainty of how Congress will approve this text. Is there a risk of making the regime looser? Looser I don’t believe. The changes that come must be precisely in the sense that you strengthen it.

Another point is the issue of criminalization and punishment. As the government ordered, the contingency in case of threat to the achievement of the goal would be optional. Can this change? I have to wait for criticisms and suggestions. I must present the report on Wednesday (10). I still need to talk to several benches, and I should do it on Tuesday and Wednesday of next week. From then on, I am in a position to present the report with all the aspects that I consider important.

But Mr. Would you say that there is this demand? There is demand. Most of the deputies.

The minister even said publicly that this is an issue that you are studying. Can we expect any changes in this regard, then? [Silêncio]

Let’s put in the interview “deputy widens his eyes”. [Risos] Let’s wait. We will see. Let me finish with the countertops.

But what mr. think about it? I don’t want to express an opinion, because the discussion could get stuck, or it could lead to other aspects. I prefer that the discussion manifest itself. I’m gathering information.

What other suggestions would Mr. it received? Basically on top of exceptionalities. There is a lot of criticism, there are 13.

Mr. intend to move? It has a lot of suggestion, to include and to remove [da lista de exceções]. Much more to take away.

And Mr. Do you think any are valid? We are studying each one, because some are of a constitutional nature. But there is a discussion that, as some of them are constitutionalized by the Transition PEC, when voting on the new framework, the PEC ceases to prevail.

There are exceptions provided for in the spending ceiling, and when approving and sanctioning the framework project, this is revoked… And it automatically ceases to be constitutional. You can tinker.

The exceptions to the Transition PEC are donations, universities’ own revenues… There are these, we are studying whether it is worth it. What concept are we evaluating? Those with budget neutrality don’t have a problem, they enter on one side and leave on the other. I donate and you build something or buy something. So it’s okay to be out [do teto]. We are evaluating what might have an impact.

In the case of state-owned companies, the government kept investments only in financial companies under the limit. But there was a maneuver back there with Emgepron, a state-owned military company that received funding to build a ship, and this was the target of a warning from the TCU. How to avoid this type of maneuver? We are studying this exclusion.

The ceiling today has triggers for correcting the accounts, but there is no such thing in the current government’s proposal. Mr. will include in the opinion? This is being criticized a lot and there are many suggestions in this regard. We are evaluating what we call triggers. That would be too much punishment. Sanctions for non-compliance with the target. Because what is the sanction provided for non-compliance with the target?

Actual growth of 50% of expenses instead of 70%. And the president’s message to Congress citing adjustment initiatives. The government considers these two measures to be an ‘enforcement’ [incentivo ao cumprimento da regra] and that you don’t need more. But a lot of people criticize it, so we are evaluating it.

Proceedings in Congress

• Ordinary bill of law (PLDO case): To be changed, it needs the endorsement of only half of those present at the session plus one, provided that 257 deputies and 41 senators attend (simple majority).
• Complementary bill (case of the framework proposal): To be changed, it needs the endorsement of at least 257 deputies and 41 senators (absolute majority).

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Cláudio Cajado (PP-BA), 59 years old

Federal deputy since 1995. He was also councilor in Dias D’Ávila, Bahia. He temporarily chaired the PP last year. He is a close ally of the mayor, Arthur Lira (PP-AL).