Lira defends restrictions on the government if it fails to comply with the framework – 05/07/2023 – Market

The president of the Chamber of Deputies, Arthur Lira (PP-AL), said this Sunday (7) that Congress should tighten the fiscal framework proposal sent by the Luiz Inácio Lula da Silva (PT) government, in particular by establishing restrictions on case of non-compliance with the rule.

Today, the legislation determines that the government needs to limit expenses if the assessment of revenues and expenses is not compatible with the objective to be pursued in the year. There is even a risk of penalties for public agents if they do not block funds in these cases.

In the proposal sent by the team of Minister Fernando Haddad (Finance), there is flexibility and the freezing of resources becomes optional.

“I think the enforcements [incentivos ao cumprimento da regra] should come in the text already from the Chamber and that, without a doubt, the Senate will make its contribution so that this does not remain in limbo”, said Lira in an interview with CNN Brasil.

The president of the Chamber, who is traveling to New York, said that the punishment in case of non-compliance should fall on the government.

“We do not defend the personal accountability of the public agent, but the government as a whole has to have restrictions when it does not meet the goals proposed in the framework. I believe that there should be a change in the text so that this legislation becomes more rigid.”

The main economic proposal of this beginning of the government, the fiscal framework will replace the spending ceiling and should be voted on in the Chamber of Deputies later this month.

The fiscal framework sets rules, parameters and mechanisms to balance public accounts, so that the government does not spend more than its revenues and ends up increasing the public debt in an uncontrolled manner. Having rules gives creditors predictability and security, allowing the interest charged to fall.

In an interview with Sheet, the rapporteur for the project, Claudio Cajado (PP-BA), also hinted that it should include punishment for the government in case of non-compliance. Cajado, which is close to Lira, should present its text this week.

According to Cajado, there is demand from deputies about restrictions in case of non-compliance.

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.