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July 3rd, 2018

Legislative Newsletter - Edition 097

Golden rule at stake

In year of election, the negotiation to approve amendments to the population intensified.

Legislative Newsletter - Edition 097

With the proximity of the recess in the Legislative Branch, assignments in the National Congress stepped up around a very delicate subject for the representatives, specially, for society, the budget. The Law Project of Budgetary Guidelines (LBG) – PLN 2/2018—CN – establishes the main goals and federal government priority for the subsequent fiscal period, namely 2019.

Without the approval of the LBG, constitutionally, the National Congress must not have the recess in the middle of the year, since the Federal Constitution, in the article 57, §2º states that “The legislative session will not be discontinued without the approval of the bill of budgetary guidelines” this rule seeks to guarantee the health of the budget, public accounts and the security in the hiring of goods and services by the Public Authorities.

In year of election, the negotiation to approve amendments and “show yourself” to the population intensified, even more with the mandatory of the enforcement of such amendment. Since the promulgation of the Constitutional Amendment 86, in 2015, the budget became mandatory, forcing the Union to implement the ceiling amount of “1,2% (an integer and two tenths percent) of the current revenue realized in the prior year, according to the parameters of the equitable schedule defined in the complementary law expected in the §9º of the article 165 ” of the Magna Carta.

In other words, all that is allocated in the budget within the limit of 1,2% of the current revenue must be fulfilled, revealing an opportunity for the representatives to get acceptance of their platforms and ideas. For that, it is necessary a lot of negotiation between political parties and representatives to establish which amendments will be accepted and incorporated to the report of the rapporteur, Senator Dalírio Beber (PSDB/SC), that analyzed the 1910 amendments presented by the representatives and committees of the Legislative Houses, and presented on Sunday, first day of July 2018, your report to be discussed and voted in the Mixed Budget Committee.

The fiscal targets of the 2019 budget of the National Congress, have a primary deficit of R$139 billion for the Central Government in relation to the Fiscal Budget and the Social Security of the Union; a deficit of R$3,5 billion for the federal state-owned enterprises (disregard the companies of the Petrobrás and Eletrobrás group) and a surplus of R$10,5 billion for the States, Federal District and Municipalities.

The minimum wage is expected in R$1.002,00 for 2019, R$1.076,00 for 2020 and R$1.153,00 for 2021, in terms of the report of the rapporteur.

Something unprecedented must occur in the next year (until 2021): the Golden[1] rule will be disrespected in 2019 in R$260 billion, whereby the accomplishment of credit operations will exceed the amount of capital expenses, in contrast to the Federal Constitution, in the article 167, subsection III.

After numerous reunions and divergences concerning about the golden rule in the budget, the rapporteur indicates some actions to be taken to mitigate the negative impact of the deficit in public accounts. The rapporteur proposes to force the processing of the PL 6726/2016 that regulates the ceiling of the public functionalism, aiming to reduce the expense.

Worried with the disrespect to the Golden rule, the rapporteur disposes that none new renounce may be created in 2019, and those [renounces] that expire will be extended only under the condition of decreasing of the related amounts, emphasizing that this deficit situation in the country will endure at least until the year 2021, cause of this is necessary awareness in expenses and efficiency of the government management, in detriment of individual power projects. In times of election the common welfare must prevail in face of the electoral subjectivism. 

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[1] The amount provided for the Credit Operations Revenue must not be higher than the capital expense constant in the Project of the LBD