LDO 2024: text imposes payments to international bodies – 04/19/2023 – Market

The payment of contributions from Brazil to international organizations will become mandatory in 2024, according to the device included in the PLDO (Budget Guidelines Bill), sent to the National Congress last Friday (14).

The alteration was proposed in a context in which the Luiz Inácio Lula da Silva (PT) government is trying to settle the debts inherited from past administrations with various entities, such as Focem (Fund for the Structural Convergence of Mercosur), WTO (World Trade Organization) and WHO (World Health Organization).

Currently, these expenses are classified as discretionary —that is, execution is at the discretion of the government, depending on the availability of resources. For 2023, the current management estimates the payment of an amount of BRL 5.6 billion, which includes both the contributions planned for the year and the debts accumulated in previous years.

In the 2024 LDO project, the mandatory expenditure section includes “regular contributions established by international agreement, entered into between Brazil and international organizations”.

The device also provides for the obligation to pay “payments of quotas for the initial constitution of the capital of international banks and funds, created in accordance with the norms of public international law, which have been incorporated into the Brazilian legal system”.

The text can still be changed during the discussion at the CMO (Mixed Budget Committee). The Constitution provides that the LDO project must be approved by Congress by July 17. Otherwise, the Legislature cannot go into recess.

The Brazilian government failed to honor its commitments to some international organizations after the financial crisis of the last years of the Dilma Rousseff (PT) administration, between 2015 and 2016. The problem intensified during the administration of former President Jair Bolsonaro (PL).

The default made the country run the risk of losing the right to vote in these organizations and to have access to funds for investment in projects.

In December of last year, with less than a week left until the end of his term, Bolsonaro transferred R$4.6 billion to pay Brazil’s contributions with international organizations and the payment with global development banks.

In January of last year, the economic ministry allocated resources to settle half of the debts accumulated by the then Brazilian government with global entities.

The payments, in the amount of R$3.64 billion, took place days before Brazil assumed a seat as a non-permanent member of the UN Security Council — one of the forums in which the country was at risk of losing its right to vote. due to debts.

Since resuming the Planalto, in January of this year, the Lula government has reformulated Brazilian foreign policy. At Itamaraty, for example, secretariats dedicated to Latin America and the Caribbean, Africa and the Middle East were recreated; and Climate, Energy and Environment.

One of the priorities is to rebuild bridges with Latin American countries, particularly in international forums such as Unasur (Union of South American Nations) and Celac (Community of Latin American and Caribbean States).

Since the beginning of the third term of the PT administration, Brazil has settled BRL 910 million in debts with international organizations. In this year’s Budget, there is a forecast for the payment of R$ 2.9 billion in contributions to international organizations, an amount that adds to an amount payable of R$ 2.7 billion accumulated over the last few years.

So far, contributions have been paid to the IAEA (International Atomic Energy Agency), Aladi (Latin American Integration Association), the Secretariat and Parliament of Mercosur, the CPLP (Community of Portuguese Speaking Countries), the WHO (Organisation World Health Organization), the ILO (International Labor Organization) and the WTO (World Trade Organization), among other bodies.