Union risk with court defeats exceeds BRL 1 trillion – 04/15/2023 – Market

The government communicated to Congress that it sees as likely to lose more than BRL 1 trillion as a result of unfavorable actions in court, a growth of 16% compared to a year ago. The value represents a risk for the public accounts in the coming years, due to the high possibility of the amounts being transformed in the short term into new precatorios (State debts recognized by the Justice with no chance of new appeals).

The alert is made by government technicians in the PLDO (Budget Guidelines Bill) of 2024. estimates.

It is the first time that the PLDO is sent to Congress, predicting a probable risk of more than R$ 1 trillion with losses arising from lawsuits. The direct administration, autarchies, foundations, dependent state-owned companies and the Central Bank appear as parties in these cases.

Part of the actions listed refer to demands from states and municipalities. They ask, for example, for a review of Fundef transfers (which could generate a loss of BRL 133 billion). The governors also demand compensation from the Union for the ICMS cut implemented in the Bolsonaro government (R$ 19.6 billion, according to government calculations).

Also on the list of cases listed by the PLDO is the so-called lifetime review, approved by the ministers of the STF (Federal Supreme Court) by 6 votes to 5 in December 2022 and with a final decision published last Thursday (13).

The decision now allows policyholders to include the amounts of contributions made before 1994 in the calculation of retirement benefits and pensions, benefiting those who had higher payments before the beginning of the Real Plan. With the publication, processes that were stalled in court can start moving again.
The new values ​​provided for in the PLDO are monitored by technicians and can be added to the stock of precatories existing today. The amount of amounts payable has grown 41% since the end of 2021 and reached BRL 141 billion in 2022.

The growing value of writs was aggravated by an initiative by the Bolsonaro government, which, with the approval of Congress, managed to amend the Constitution twice to change the mechanism for paying writs of payment and create space for more spending in the following year — elections.

The result was the creation of a payment ceiling for precatories, and any amount that went beyond this limit began to be postponed to the following years. In addition to the total amount already computed not being paid, new amounts continue to be added each year.

“If it weren’t for the PEC [proposta de emenda à Constituição dos Precatórios, posteriormente transformada em duas], all subscriptions had to be paid. with the roof [de precatórios], you have limited payment and the stock has been growing. So, yes, it can be attributed to that”, says Heriberto Henrique Vilela do Nascimento, undersecretary of Public Accounting at the National Treasury.

The warning about a possible snowball growth with this debt has been issued by specialists since the change made by Bolsonaro and the then Minister Paulo Guedes (Economy). The value may increase even more in the coming years because the liability reduction mechanism foreseen at the time the amendments were prepared has not been implemented.

The Bolsonaro government argued that this would be possible through different instruments – such as, for example, a meeting of accounts between the precatories and the amounts to be paid by Union debtors.

In addition, payments owed to the Treasury by infrastructure concessionaires could be deducted from the total payments – which could use precatories purchased by them on the market (generally at a discount) to settle their debts.

But these instruments are not being implemented as promised, not least because the lack of regulation is blocking the process. In the case of airports, for example, the Spanish company Aena would like to use the mechanism – but the government justifies that there is no legal security for the operation.

“The regulation on this is not complete and it is difficult to operationalize it”, says Nascimento.

The high values ​​of precatories are a threat to Minister Fernando Haddad’s (Finance) plan to rebalance public accounts in the coming years. Especially in 2026, when the effect of Bolsonaro’s amendments (which allowed postponing the values) ends. If nothing is done, the accumulated bill may arrive all at once.