Proposal sets date for future government to create a new sustainable fiscal regime

11/21/2022

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Alessandro Vieira — Foto: Roque de Sá/Agência Senado

The alternative proposal to the so-called Transition PEC, a proposal to amend the Constitution, filed on Saturday by Senator Alessandro Vieira (Brazilian Social Democracy Party, PSDB of Sergipe) and anticipated to Valor, reduces to R$70 billion from R$198 billion the necessary increase to the spending cap to ensure the maintenance of R$600 paid monthly by the cash-transfer program Auxílio Brasil/Bolsa Família and ensure the additional Early Childhood Benefit of R$150 per kid to families.

In addition, the new PEC sets a deadline of July 17, 2023, for the government to approve a complementary law creating a new sustainable fiscal regime, with the repeal of the spending cap, the rule that limits growth in public spending to the previous year’s inflation.

The senator points out that the elected government’s proposal is “very generic and broad”, which could put at risk the stability and fiscal credibility of the future government, besides leading to an increase in the cost of the country’s debt. This could compromise the fiscal capacity to honor its commitments and to implement public reconstruction policies that the country so desperately needs. “We understand that maintaining the credibility of the Brazilian government’s fiscal framework is essential to begin the process of reorganizing the Brazilian state,” says Mr. Vieira, to justify the presentation of an alternative text.

Growing discontent in the market and internal pressures from political allies of President-elect Luiz Inácio Lula da Silva (Worker’s Party, PT) lead to the expectation that the first names to occupy the Ministries, which was expected to be made official only in December, may begin to be defined as of this week.

In the evaluation of some allies, the delay in defining the first names has given a sign of a lack of sense of opportunity to generate positive media before the beginning of the new term. PT sources cite the importance of Mr. Lula not losing the timing for the choice of the Economy Minister, but some evaluate that this name may not be announced in the first wave precisely to mark a position that the President-elect will not be influenced by direct market demands.

The former Minister of Education Fernando Haddad, the defeated candidate of the PT for the government of São Paulo, is one of the candidates to head the economic team of the new government.

One of the few areas of the transition team that have not yet had its members confirmed, the Defense technical group, is expected to be announced as of this Monday. One of the names that emerge as a clear front-runner is that of Senator-elect Flávio Dino (Brazilian Socialist Party, PSB), who coordinates the Justice and Public Safety technical group.

Gilberto Kassab’s PSD (Social Democratic Party), which will have 42 deputies and the second-largest Senate caucus in 2023, with 11 members, will have a privileged space among the nominations. The party can occupy up to three Ministries or special secretaries of equal status in the new government.

Regional coordinator of Mr. Lula’s campaign in the Central-West region, Senator Carlos Favaro (Social Democratic Party, PSD, of Mato Grosso) is the favorite to head the Ministry of Agriculture. He was one of those responsible for overcoming resistance in the sector and opening doors in the agribusiness sector for Mr. Lula during the polarized electoral dispute.

*By Edna Simão, João Valadares, Matheus Schuch, Andrea Jubé, Vandson Lima, Renan Truffi — Brasília

Source: Valor International

https://valorinternational.globo.com/