Government consults TCU; The objective is to free up R$30 billion in spending

The government of Luiz Inácio Lula da Silva (PT) formalized a consultation with the Federal Audit Court (TCU) on the rule that limits the contingency of resources in this year’s Budget. The document, signed by the Minister of Planning, Simone Tebet, was sent on Monday (29) and asks the body to clarify whether limiting the blockade to the maximum value of R$25.9 billion would violate the Fiscal Responsibility Law (LRF) and the fiscal framework.

A provision in the Budget Guidelines Law (LDO) of 2024 already establishes this level as the maximum subject to contingency. But technicians from the department assess that the excerpt, included in the text by federal deputy Danilo Forte (União-CE), has no legal certainty.

A stricter interpretation of fiscal rules would lead to the blocking of an additional R$30 billion. The controversy arises because, according to the rules of the new framework, the Executive may have to contingency up to 25% of discretionary expenses, the equivalent of R$56 billion, to meet the fiscal target. The objective for 2024 is to eliminate the primary deficit.

In other words, when questioning the TCU about the legality of the milder contingency, the government expects a kind of approval to release R$30 billion more in spending than would be allowed by the stricter interpretation.

Afraid that investments from the New Growth Acceleration Program (PAC) could be compromised, a wing of the government defended changing the fiscal target.

The Ministry of Finance, which is against revising the target, understands, however, that the maximum blockade would be R$ 25.9 billion, because it would be necessary to respect, in addition to the target, the minimum floor of 0.6% growth expenditure, also foreseen in the new framework.

At the time of the LDO discussion, the department led by Fernando Haddad negotiated the inclusion of a paragraph in the text in which it explains the blockade on blocking resources given the need to guarantee the minimum level of 0.6% real increase in expenses.

Law 10,028/2000, however, says that it constitutes an administrative infraction against the public finance law “failure to issue an act determining limitation of commitment and financial movement, in the cases and conditions established by law”.

A divergent understanding between the government and control bodies could result in individual punishment for the managers responsible for the Budget, including Minister Simone Tebet.

If the TCU’s guidance is unfavorable to the Executive, the assessment of part of the government is that this would require a re-discussion of the target of this year’s fiscal policy.

Federal deputy Pedro Paulo (PSD-RJ) had already made a request for a statement from the TCU in December, but the court understands that the request can only be analyzed after the bimonthly income and expenditure report for March, when the blockade comes to an end. executed.

To the newspaper “O Estado de S.Paulo”, the parliamentarian, who is deputy leader of the government in the Chamber, said that, given the scenario, he will present a complementary bill or an amendment on a matter already being processed in the House, to make official the government’s proposal to make a smaller contingency.

“Due to the fiscal framework, you cannot violate the fiscal responsibility law. And the 0.6% is not a floor, it is a band. Unfortunately, the clause that they intended to be anticyclical is poorly written. It is not written that the 0.6% is minimum, so I think this has to be addressed in the complementary law. What I committed to the minister [da Fazenda, Fernando] Haddad was that I was going to present what I believe to be the correction of the laws”, said the deputy.