In the assessment of these sources, the Court calls for rigidity while simultaneously reducing fiscal management instruments. Technicians note that the TCU has repeatedly said the fiscal framework must be applied rigorously, that budget freezes should target the midpoint of the fiscal target, and that the government must commit to ambitious fiscal goals. There are also rulings stating that even when a law exempts certain expenditures from the target, this can undermine the intertemporal sustainability of public debt, they said.

According to interlocutors, by removing expenditures from the pool subject to contingency and requiring detailed explanations for why certain requests are excluded from the budget — even when the exclusion is intended to comply with the fiscal framework — the TCU makes compliance more difficult, as occurred in Wednesday’s decision. For these technicians, the fiscal rule itself should be sufficient justification for such decisions.

Members of the executive branch also argue that the TCU’s decision interferes in the drafting of the budget bill, encroaching on responsibilities traditionally assigned to the executive and legislative branches. Brazil’s budget already has a high degree of rigidity, and the measure moves toward further reducing the autonomy of these branches in defining the appropriations to be included each year in the Budget Law, they say.

In preparing the draft annual budget bill (PLOA), all sectoral bodies — including regulatory agencies — submit requests far exceeding what is feasible from a budgetary standpoint. In practice, the TCU’s decision ends up shielding agencies’ demands without proper merit analysis, sources said. As a result, expanding funding for these structures would tend to come at the expense of compressing other public policies, given the constraints imposed by fiscal rules.

As Valor reported, the TCU ruled that the federal government must justify any budget freezes affecting regulatory agencies and must not interfere with resources earmarked for operating expenses and oversight. The Court also set a 180-day deadline for the government to present a plan to establish the agencies’ financial autonomy.

For congressional technicians, the decision could create problems this year if there were an obligation to fully allocate the resources requested by the agencies. For now, however, it is sufficient to demonstrate that the amounts provided are adequate. Even so, it will be necessary to monitor how the measure affects the drafting of the 2027 budget, a source said.

Under the ruling, the Federal Budget Secretariat (SOF) and the Budget Execution Board (JEO) must, until the action plan is presented, demonstrate that the appropriations included in the annual budget bill are sufficient to cover agencies’ operating and oversight expenses whenever the amounts are below those requested by the bodies.

The determinations were issued as part of an operational audit aimed at assessing the adequacy of organizational structure, management, and results at the National Telecommunications Agency (Anatel), the National Electric Energy Agency (Aneel), the National Agency for Petroleum, Natural Gas and Biofuels (ANP), and the National Mining Agency (ANM).

Although the process focused on only four regulatory agencies, the determinations will apply to the budgets of the other seven agencies operating in Brazil. The Court also ordered the SOF and the JEO to justify any bimonthly freezes in agencies’ budgets and determined that funding for operating expenses and oversight be preserved.

*By Giordanna Neves, Valor — Brasília

Source: Valor International

https://valorinternational.globo.com/