STF schedules judgment on government request to change precatório regime

The president of the Federal Supreme Court (STF), minister Luís Roberto Barroso, scheduled the judgment on a government request to change the rules for payment of court orders for next Monday (27). The analysis of the case will take place in the Court’s virtual plenary session, for 24 hours. Precatório are payments owed by the Union due to final court rulings and the amount must be foreseen in the budget.

The judgment is expected by the Lula government’s economic team in view of the closing of the Budget for 2024. The expectation is that the government will be authorized to pay off, in 2023, the stock of R$95 billion in court orders held up until now through credit extraordinary.

The analysis of the action was released amid tension between the Supreme Court and the Executive with the approval of the proposed amendment to the Constitution (PEC) that limits the individual decisions of the Court’s ministers. The government leader in the Senate, Jaques Wagner (BA), voted in favor of the proposal that limits the STF.

Governors from the Northeast are also interested in the trial, which could release the payment of around R$20 billion from the former Fundamental Education Maintenance and Development Fund (Fundef) to the states, reported the Brazil Agency. The case’s rapporteur, Minister Luiz Fux, considered the progress of the Budgetary Guidelines Bill (LDO) in Congress and the impact of the issue on the federal budget to call the extraordinary session.

The current payment regime was approved by the government of Jair Bolsonaro (PL) and allowed the payment of court orders above 60 minimum wages to be paid in installments. The constitutionality of the new rule is challenged by actions filed, in 2021, by the PDT and the Brazilian Bar Association (OAB). In September, the Attorney General’s Office (AGU) asked the STF to overturn the rules created in the last administration, which defined an annual ceiling for expenses with the payment of court orders until 2027.

The Union wants the Court to separate the classification of Treasury spending on court orders into two parts: the main amount would continue to be classified as primary expenditure; Interest and monetary corrections would now be treated as financial expenses, with no impact on the primary result. The AGU maintains that the regime foresees an increasing increase in expenditure and should generate an unpayable stock. According to the agency, the total debt could reach R$250 billion by 2027.