Opinion – Vinicius Torres Freire: Lula wins PEC game, ranks centrão and despises yellow debt card

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Opinion – Vinicius Torres Freire: Lula wins PEC game, ranks centrão and despises yellow debt card

Initially, the elected government wanted the “PEC da Transição” to authorize additional expenditures of R$ 175 billion in relation to the 2023 Budget project. investments, depending on the collection performance. The package would then be worth R$ 198 billion; Luiz Inácio Lula da Silva went so far as to say that his values ​​were not final, but he would not start a negotiation with a low kick.

For now, adding such possible investment expenses, a package of R$ 169 billion should be approved. It is almost the initial value proposed by the transitional government. It is double the estimated maximum value to avoid a worrying growth in the public debt. Aside from miracles.

Lula won the game or, let’s say, in these days of the Cup, he managed to qualify with ease, even conceding a tie to the centrão, who also goes to the next phase. Arthur Lira (PP-AL) and Rodrigo Pacheco (PSD-MG) are elected to head the Chamber and Senate for the next two years.

Lira told Lula that there would only be a PEC if there was any agreement to maintain or compensate for the rapporteur’s amendments, the so-called “secret budget”, whatever the Supreme Court overthrows the current aberration. For the time being, Lula has obtained a parliamentary majority to even approve constitutional amendments, but subject to the good will of the barons of the amendment, Lira and company.

It is necessary to see the final format of all this, in detail, to know the arrangements that will be made with the centrão, the payments due for the atrocious incompetence of the government of darkness (2019-2022) and other mummies that appear in subparagraphs, subsections and paragraphs.

It was said that Congress would put a limit on Lula’s pretensions 3. By mere arithmetic, it did. But R$ 30 billion less will only make projections for an increase in the public debt an itch.

We don’t know what will happen to federal revenue in 2023 (probably higher than the pessimistic estimate for now) or GDP or interest, without which it is difficult to estimate the increase in public debt. Even in the best case, it is also difficult to see how not to increase the tax burden or sell equity in order to avoid even more harmful debt. Hard to believe in tax hikes and privatization

Yes, Congress should limit the so-called “license to spend” (spending beyond the cap) to two years, which may be irrelevant for at least two reasons. If there is a fiscal rule that actually contains unlimited debt growth, the PEC’s authorization of additional expenditure may not be valid. If there is no tax rule that works, we are going to run very serious risks, whatever the duration of the “license”.

There are also those who say that an article was inserted in the PEC obliging Lula to send to Congress, by August 31, 2023, a law “with the objective of establishing a sustainable fiscal regime to guarantee the country’s macroeconomic stability and create the appropriate conditions for socioeconomic growth “. That is, a new deficit and debt limitation rule.

First, given this wording, this project could be anything and nothing. Second, if the president does not pass such a law, what happens? If Congress wants to, it can invent a way to put pressure on Lula, depending on the government’s political and popular strength. But this article is for English to see.

Lula takes your package. Lira leads to reelection and some scheme so that her group maintains the power to decide what to do with the fat part of the Budget that has no mandatory destination (about 95%).

The fiscal problem was swept under the rug.

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