Framework: Rapporteur foresees lock for tender and readjustment – 05/15/2023 – Market

Leaders of the Chamber of Deputies closed an agreement to tighten the rules of the new fiscal framework proposed by the team of Minister Fernando Haddad (Finance) with the inclusion of automatic triggers to adjust expenses in case of non-compliance with the target. Among the measures, the prohibition of public tenders and raises for servers.

The policy of valuing the minimum wage, however, will be shielded from these mechanisms, as requested by President Luiz Inácio Lula da Silva (PT). Spending on the Bolsa Família program will also be out of the reach of these devices, according to the rapporteur, Deputy Cláudio Cajado (PP-BA).

“The minimum wage and Bolsa Família are exceptional. Bolsa Família, as it is a mandatory expense, and the minimum wage because [o colegiado de líderes] made an agreement here so that we could exceptionalize”, said Cajado, after meeting with leaders of the Chamber at the official residence of the President of the House, Arthur Lira (PP-AL), on Monday night.

As shown to Sheet, amid the discussion of triggers, the government and Congress even debated the possibility of halting real increases in the minimum wage (above inflation) in the event of the fiscal target being exceeded. This sanction would only be applied in an extreme situation, if the non-compliance occurred for two consecutive years.

The possibility generated a reaction within the PT and the government itself. In a meeting with the core of government this Monday (15th), Lula defined as a priority the preservation of a policy of valuing the minimum wage and the Bolsa Família program. The PT’s orientation was that these two items should remain immune to sanctions in the new fiscal framework.

Despite the agreement, voting on the new fiscal framework proposed by the government was postponed to next week. On Wednesday (17), the expectation is to approve only the urgency of the project, which guarantees it priority on the agenda of the Chamber. According to Cajado, there is an expectation of voting on the merits of the text on the other Wednesday (24).

According to interlocutors, the drafting of the framework must provide that the triggers do not stop the operation of the minimum wage appreciation policy — whose design still needs to be validated by Congress.

This means that, if the Lula government’s proposal prevails, the national floor will always be readjusted by inflation plus the GDP (Gross Domestic Product) variation of two years before, even in case of non-compliance with the target. On the other hand, only the real readjustment prescribed by the policy can be adopted in this scenario — that is, even more generous gains would be unfeasible.

The exceptionalization of these points meets a demand from the PT, which had to give in on other issues. The acronym had been resisting the implementation of so-called adjustment triggers, but the final agreement provides for the inclusion of these devices in the text.

In the first year of non-compliance with the target, the government will not be able to create new positions, expand aid, benefits, create new mandatory expenses and grant new tax incentives.

The adoption of a measure that implies an increase in mandatory expenditure above inflation will also be prohibited – except in the case of the minimum wage, which may follow the appreciation policy.

If the goal is still not met for the second year in a row, other adjustment measures come into play, which prohibit the granting of salary increases to civil servants and the holding of public tenders.