Government holds execution of rapporteur amendments and investments for fear of increase in mandatory spending

The Jair Bolsonaro (PL) government issued a decree limiting the execution of rapporteur amendments, an instrument used by parliamentarians to irrigate their electoral strongholds, and expenditures for funding and investments in the first three months of the year.

The measure imposes, in practice, a kind of control at the cash register. It is necessary due to the risk of growth in mandatory spending, which will have to be recomposed through cuts in other areas.

To ensure the feasibility of these reductions, the government prevents ministries from making the commitment (first phase of expenditure, when the commitment is made to the purchase or the work in question) and payment of all amounts available in the 2022 Budget.

The decree signed by Bolsonaro limits execution to a proportion of 1/18 of the available endowment per month until March. The act was published in an extra edition of the DOU (Diário Oficial da União) this Friday (11).

The measure affects the so-called discretionary expenses, which include funding, investments and also the rapporteur and commission amendments, distributed largely to government allies.

If necessary, the Special Secretariat for the Treasury and Budget may alleviate the contention and increase this proportion to 1/15, with the prior approval of the Civil House.

The individual and bench tax amendments, which are provided for in the Constitution and have an equal division between allied and opposition parliamentarians, are shielded from the temporary limitation.

The 2022 Budget reserves BRL 16.5 billion for rapporteur amendments, and the regular monthly proportion, without limitation, would result in an execution of BRL 4.125 billion by March. But the government stipulated a lower value of R$ 2.75 billion.

The same logic is observed in other discretionary expenses. They add up to BRL 114 billion in the Budget, but only BRL 19 billion will be available in the first three months of the year. Without limitations, the value would be R$ 28.5 billion.

The Ministry of Economy will release on March 22 its first bimonthly assessment of the Budget. It is in this document that government technicians will indicate the need to recompose mandatory expenses and cut other areas.

as showed the leafthe government has already mapped out the need to increase spending on subsidies for programs such as the Safra Plan by R$3.1 billion, due to higher interest rates.

The extra bill stems from the significant increase in interest rates, which increased the expense of the so-called equalization – the government pays the difference between the rate charged to producers, lower, and the effective cost of the financial institutions that lend the money.

There are still other dammed demands, such as the restoration of R$ 777.9 million in the electoral fund. A rule stipulated in the LDO (Budget Guidelines Law) provides that the fund must be R$ 5.74 billion – the largest in history -, but the Budget reserved only R$ 4.96 billion.

The 50% cut in funding from the Ministry of Economy should also make some recomposition of the portfolio necessary. At the beginning of the year, the need was estimated at around R$ 5 billion.

According to sources in the economic area, the purpose of the decree is to be prudent in the execution of expenses due to the risks of growth in mandatory expenses.

In the sanction of the Budget, Bolsonaro already had to make a veto of R$ 3.2 billion to recover personnel expenses that had been underestimated by the National Congress. The cut mainly affected the INSS (National Social Security Institute) and the Ministry of Education, generating political friction.

At the time, the rapporteur’s amendments were shielded from any cut. Now, however, the limitation of execution goes against the interests of parliamentarians.

In an election year, the expectation of technicians from the Ministry of Economy is that there will be pressure for the commitment of the greatest possible volume of amendments in the first half of the year, to avoid electoral restrictions.

The assessment is echoed in the National Congress, where base parliamentarians rely on the resources of the amendments to increase their chances of reelection.

The electoral law says that, in the three months before the election, it is forbidden to carry out voluntary transfers of resources to states and municipalities. The amendments fit in this case, according to the technicians.

The only exception is when the resources are used to guarantee the execution of a work or service already in progress, with a defined schedule, or to respond to emergency situations or public calamities.

Therefore, new expenditure commitments will have to be made by July 1st or after the elections. Despite this, members of the Planalto state that there are divergent interpretations and that some types of efforts could be made during the electoral period.