The government’s legal department opposes Guedes and evaluates precatory outside the ceiling – 15/09/2021 – Market

While the economic team works to limit the payment of court orders in 2022, a plan to pay off debts in full and remove this expense from accounting for the ceiling rule gained momentum in the government — which limits the growth of public spending to the variation in inflation.

The idea is to support the approval of a PEC (Proposed Amendment to the Constitution) prepared by the vice president of the Chamber, Deputy Marcelo Ramos (PL-AM), to make the fiscal rule more flexible. This would, therefore, make the alternatives currently sought by Minister Paulo Guedes (Economy) unnecessary.

The Executive tries to solve the explosion of expenses with the payment of government debts recognized by the Justice and which have no possibility of appeal. The count of court sentences jumped from R$54 billion this year to R$89 billion.

The growth of this expense compressed the 2022 Budget, forcing the government to seek solutions to make room in the accounts and make it possible to expand the Bolsa Família.

Guedes acts on two simultaneous axes. In the simplest of them, the idea is for the Judiciary itself to establish a ceiling for the payment of court orders in 2022, without the need for congressional approval.

The plan, negotiated with the president of the STF (Supreme Court), Luiz Fux, would depend only on a resolution by the CNJ (National Council of Justice). The measure would reduce this expense by R$49.1 billion next year.

Members of the government’s legal department, however, assess that the measure has a high risk of legalization and tends not to prosper.

The justification is that the simple decision of the CNJ, without the support of an instrument provided for by law or the Constitution, will end up being questioned in the STF. Therefore, the assessment is that it would be necessary to pass a proposal in Congress to guarantee this basis for legislation.

The plan suffers from resistance from the STF ministers. Court members were uncomfortable with pressure made by Guedes for the CNJ to resolve the case. According to reports, the minister was warned that the collegiate will not solve the problem on its own, but only if it is provoked after filing an action in the Supreme Court or approval of a proposal by Congress.

On another front, Guedes sent a PEC to the Legislative to address the issue. The measure opens a margin of R$ 33.5 billion in 2022 to the installment payment orders. The text also creates a fund with privatization resources to reduce public debt and make precatory payments without counting the ceiling.

The proposal, which was criticized by experts, was also received with caution in other areas of the Executive. According to government officials, the measure is broader than necessary and difficult to approve.

The text must be voted on this Thursday (16) at the CCJ (Committee on Constitution and Justice) of the Chamber.

Members of the legal area also argue that the PEC of Guedes could also end up in court. That’s because government creditors may file suits questioning the payment of precatório.

Given this diagnosis, the idea of ​​supporting the approval of the PEC presented by deputy Marcelo Ramos gained strength in the government. The text removes the precatório fully from the fiscal rule and makes a kind of lowering of the ceiling.

The measure establishes that the government must recalculate the spending ceiling. For this, it would be necessary to go back to 2016, the year before the entry into force of the fiscal rule, and subtract from the ceiling the amount corresponding to the court orders. Then, the spending limit would be recalculated year by year, adding the inflation variation over the period.

When preparing the proposal, which guarantees the maintenance of full payment of court orders, the deputy argued that dividing these debts in installments would jeopardize the country’s credibility.

“The PEC proposed by the government, from the creditor’s point of view, is a default, and from the fiscal point of view, it is pedaling,” he criticized.

Ramos argues that court orders are a type of debt and are similar to expenses such as the amortization of public debt, which is not accounted for in the ceiling. In addition, he justifies that the government does not have any interference in these expenses, whose definition is up to the Judiciary.

According to the deputy, the approval of his PEC will allow the government to open up a space of up to R$ 27 billion in the 2022 Budget, allowing for the expansion of Bolsa Família.

“You pay 100% of the court orders, you don’t create this legal uncertainty, you don’t send this message of government disengagement with your bills,” he said.

Ramos is collecting signatures for the PEC, which requires 171 endorsements to begin processing.

In a statement, the Federal Council of the OAB (Ordem dos Advogados do Brasil) was in favor of the PEC de Ramos.

“This solution is legally correct and fiscally responsible. The Vice President of the Chamber’s PEC respects the spending ceiling and, unlike other paths suggested, will not culminate in the filing of lawsuits questioning its validity,” says the statement.

At an event this Wednesday (15), Guedes said he made “a desperate request for help” to the Legislative and the Judiciary to solve the impasse surrounding the precatório.

In a debate at the same event, the president of the STF defended the dialogue between the institutions and, jokingly, said that Guedes is “such a friend that he puts a child in my lap that is not mine”.

In the assessment of economist Marcos Mendes, columnist for sheet, the evaluated alternatives are fiscally irresponsible and weaken the spending ceiling. For him, the government is looking for fragile arguments to enable an increase in spending next year.

Mendes, who is one of the formulators of the cap rule, states that precatório is not similar to public debt. According to him, the argument that the government does not have control over these expenses is also weak because there are other expenses also outside this decision-making power and that are under the ceiling, such as social security benefits.

“Removing from the ceiling is inevitable —and I don’t think it is—, let it be done by explaining that it is taking it out because it considers that it will compress other expenses and will take it out of the ceiling to pay other expenses. But don’t give me legal and economic principles that don’t exist,” he said.

For the economist, any easing of the ceiling should be accompanied by compensatory measures, such as the activation of triggers that stop public spending. For him, however, there is no political climate for this type of measure.

The president of the Chamber, Arthur Lira (PP-AL), said he will try to speed up the discussion at the House, taking into account the suggestions of Fux and other ministers. He announced that he will set up a special commission to debate the issue.

In a report, the IFI (Independent Fiscal Institution, linked to the Senate) stated that the removal of court orders from the ceiling could open a space of R$ 48.6 billion in the 2022 Budget. the expectations of economic agents and, consequently, on exchange, inflation and interest rates.

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