PT leader indicates that PEC may allow spending outside the ceiling as early as 2022

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The leader of the PT in the Chamber of Deputies and member of the transitional cabinet, Reginaldo Lopes (PT-MG), indicated this Tuesday (29) that the PEC (proposed amendment to the Constitution) of the Transition may be amended to authorize spending outside from the ceiling as early as 2022.

The Transition PEC filed on Monday (28) allows investments beyond the expenditure limit, if the government has registered the inflow of extraordinary revenues. This mechanism would be valid from 2023, but the congressman hinted at the possibility of this being brought forward to 2022.

The possibility of using these resources this year would represent a nod to the mayor, Arthur Lira (PP-AL), since it would unlock the so-called rapporteur amendments, used as a bargaining chip in political negotiations in Congress. Of the R$ 15.4 billion blocked in this year’s Budget, half are rapporteur amendments.

“Look, the text is for debate, it is clear that the agreement will take place in the Senate plenary, so there is still a lot of debate ahead. I do not see any difficulty if it is necessary, to close the 2022 fiscal year, to anticipate the application [da regra] of 6.5% of the extraordinary revenues of 2021 already in the year 2022. It will be the sixth time that the Bolsonaro government will need to break the spending ceiling law to get out of fiscal responsibility crimes”, said Lopes, upon arriving at the CCBB ( Centro Cultural Banco do Brasil), seat of the transition office.

The first versions of the Transition PEC already contained a “loophole” that allowed the extraordinary resources to be used in 2022. However, this prediction was withdrawn in the final version of the proposal, which was filed in the late afternoon of Monday (28 ).

The Transition PEC is the bet of the team of Luiz Inácio Lula da Silva (PT) to pay the value of R$ 600 of Bolsa Família. The protocoled proposal does not mention values, but R$ 175 billion for social programs and R$ 23 billion for investments must be outside the spending ceiling. This format would be valid for the four years of the PT government.

An increase in expenses of the magnitude intended by the PT, without compensation with an increase in revenue or a cut in other expenses, would have the consequence of increasing the account deficit in 2023. The Budget officially projects a shortfall of R$ 63.5 billion, but the current government has updated this estimate to a lower number, although still negative at BRL 40.4 billion.

The existence of public deficits indicates that the government is financing expenditures by issuing a larger volume of Brazilian debt. The cost is close to the economy’s basic interest rate, the Selic, currently at 13.75% per year.

Reginaldo Lopes showed confidence that the proposal will be approved by December 10, a date set as the deadline by parliamentarians. He said that, after approval by the Senate, the proposal could be approved in just eight days by the House, if there is an agreement.

The PT leader also stated that the party federation that his party is part of —with Rede and PC do B— must approve support for the re-election of Arthur Lira as president of the Chamber.

“We are going to forward the debate. There is an agreement of all the political forces that make up our federation, namely our party, PV and PCdoB. So, after the debate we are going to declare support for Arthur Lira”, stated the congressperson.

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