Framework releases government from blocking resources to reach goal – 04/18/2023 – Market

The government of Luiz Inácio Lula da Silva (PT) inserted in its proposal for a new fiscal framework a relaxation of the need to block resources during the year to meet the fiscal surplus target.

Today, the legislation determines that the government needs to prepare bimonthly reports evaluating revenues and expenses, predicting whether the numbers are compatible with the objective to be pursued in the year. If the data show potential frustration, the numbers need to be contingency.

The current legislation even foresees the risk of penalty for public agents if they do not promote the blocking of funds in case of need. In the government’s proposal, this change in the limitation of resources becomes optional.

The view of government members is that the need to block resources will be present anyway because, if the result is unbalanced, the penalty will come in the form of a smaller expansion of expenses in the following year.

In addition, the very forecast of unbalanced data could cause damage to the government’s reputation – which would force the Executive to take the necessary adjustment measures.

The government also proposes changing the number verification frequency. From bimonthly, the revenue and expenditure assessment report would become quarterly (at the end of March, June and September).

According to the text, if it is verified at these times of the year that the estimate of revenues or expenses may not support the fulfillment of the target, the Executive, Legislative and Judiciary branches, in addition to the Federal Public Prosecutor’s Office and the Federal Public Defender’s Office, “may” – and shall not – promote the alteration of commitment limits.

When making this change, the maximum amounts foreseen for the year cannot be increased.