Government signals new dehydration of the PEC of court orders, but voting is postponed to Thursday

The government signaled this Wednesday (1) that the PEC (proposed amendment to the Constitution) of the Precatório, which makes the Brazilian R$ 400 aid possible next year, should again be dehydrated in the face of pressure from independent parties in the Senate.

Despite the indication that the requests from the PSDB, Citizenship and MDB must be met, the president of the Senate, Rodrigo Pacheco (PSD-MG), postponed the vote on the PEC for the plenary session scheduled for this Thursday (2).

With the concessions being negotiated by the government, senators who are against the PEC already admit behind the scenes that the Palácio do Planalto should be able to approve the proposal in the Senate.

Government interlocutors have managed to reverse the resistance of senators to the project. The accounts made by allies of President Jair Bolsonaro show that the score could be close to 52 votes — it takes 49 votes from 81 senators to pass a PEC in the plenary.

One of the points being negotiated is that the maximum limit for the payment of court orders is in effect for a shorter time (until 2026, for example, instead of 2036, as it is already in the version that went through the Chamber).

The government wants to establish a ceiling for the discharge of court orders (debts recognized by the courts). The court orders that do not appear on this list will be postponed and paid in later years.

Senators fear that the creation of a ceiling on the payment of court orders will turn into a “snowball” and the Union will start accumulating too much debt in the future. Therefore, they want to reduce the validity of this maximum limit to pay the court orders.

In the negotiations in the Senate, a suggestion should also be accepted so that the increase in expenses after the approval of the PEC is linked to mandatory expenses, to the social area and to the extension of the payroll exemption.

The new changes in the PEC still need government approval to be made official. “At this moment, it is being submitted to the economic team and the Civil House of the Presidency of the Republic and we believe that we can move forward”, said the rapporteur of the PEC, Fernando Bezerra (MDB-PE), who is the government leader in the Senate.

The government and the Senate are also negotiating to remove a section of the PEC that provides rules for the securitization of active debt.

Brazil Aid

The PEC dos Precatórios is currently the main agenda of interest of President Jair Bolsonaro in Congress. It authorizes the government to spend more and makes possible government promises in the social area, such as the increase in Brazil Aid, which seek to boost Bolsonaro’s reelection campaign in 2022.

In order to increase expenses for next year by around R$ 106 billion, the PEC has two main pillars.

One measure allows for a dribble in the spending ceiling, retroactively recalculating that limit. The other measure creates a maximum value for the payment of court orders.

Due to changes in the PEC, if the proposal is approved in the plenary of the Senate, it will still need to be voted on again by the Chamber of Deputies.

However, the part of the text that has not been changed may be promulgated soon after the Senate’s approval, which would guarantee the payment of Auxílio Brasil in the amount of R$400 in December.

Senators from independent parties and from the base of the government ask Bezerra for a guarantee that the Chamber will maintain the changes made by the Senate.

education

This week, in a defeat of the economic team, the rapporteur agreed to leave expenses with debts linked to the Fundef (Fundo for the Maintenance and Development of Elementary Education and the Valorization of Teaching) now from the expenditure ceiling. Minister Paulo Guedes’ team (Economy) resisted this measure.

The removal of Fundef’s court orders from the expenditure ceiling was a particular demand of the PSD, the second largest bench in the Senate, with 12 senators.

Precatório are debts of the Union that have already been recognized by the Court (no further appeal). For 2022, there are around R$ 16 billion in debt from Fundef transfers to Bahia, Pernambuco, Ceará and Amazonas. There are still R$ 1.3 billion owed to municipalities. The PEC installments this account in three years.

Fundef’s share forecast for 2022 is expected to exceed R$ 8 billion. Bezerra had to put this expense outside the spending ceiling to meet a request from the PSD and the MDB, which is the largest bench in the Senate.

These parties defend that there is a priority in the payment of food orders (for public servants).

As the PEC creates a maximum amount in spending on court orders per year, the government had to give in and create an exceptional treatment for Fundef’s debts. The argument is that transfers from Fundeb (which replaced Fundef) are currently not accounted for under the spending ceiling.