IDIANA TOMAZELLI
BRASILIA, DF (FOLHAPRESS)
The Luiz Inácio Lula da Silva (PT) government wants to remove the ceiling for the payment of court orders and has proposed the payment of part of the court sentences as a financial expense, without violating tax rules.
The Executive also requests authorization to pay off the stock held up until now through extraordinary credit, which is also outside the reach of budget limits. The liability is estimated at around R$95 billion, and its regularization should increase the public debt.
The proposal aims to put an end to the impasse that began in 2021, when the ceiling for payment of sentences was established under the Jair Bolsonaro (PL) government.
Understand the main points of the discussion:
WHAT DID THE PRECATORIOS PEC DO?
Approved at the end of 2021, the proposal was an initiative by the Bolsonaro administration to create an annual limit for the payment of judicial debts.
Like the spending cap mechanism, the text was based on the value transferred to these sentences in 2016 and predicted its updating based on inflation during the period.
The excess amount is postponed for payment in the following years, forming a kind of debt queue – which grows as new amounts appear each year.
WHAT MOTIVATED THE PROPOSAL?
In mid-2021, the Bolsonaro government needed to send the 2022 Budget proposal, the presidential election year. The promise was to increase social spending, paying a minimum of R$400 per family into Auxílio Brasil (a replacement for Bolsa Família).
The plans were crossed by a “meteor” of R$89 billion in judicial debts, as then minister Paulo Guedes called it. The value was almost 64% higher than the R$54.4 billion scheduled for 2021.
The growth in the bill of almost R$35 billion took up the space that was available to expand the social program. Therefore, the government established a limit on judicial debts, keeping transfers at the same level as in 2021 and releasing funds to meet Bolsonaro’s wishes.
HOW LONG IS THE RULE EFFICIENT?
The first year of effect of the new rule for court orders was 2022. As a result, the government postponed R$21.9 billion in judicial debts. The constitutional amendment says that the limit is valid until the end of 2026.
WHAT HAPPENS AFTER THE DEADLINE ENDS IN 2027?
The successive postponement of judicial debts can generate a real snowball, according to the government’s own analysis.
The National Treasury warns of the risk of a bomb exceeding R$250 billion in accumulated court orders to be paid by the Union in 2027.
The Ministry of Planning and Budget, in turn, has already warned that the regularization of this liability in 2027 could cause a blackout in areas such as Health and Education, considering the need to respect current fiscal rules – including the recently approved fiscal framework.
DID THE PRECATÓRIOS PEC PROVIDE MECHANISMS TO TRY TO MITIGATE THE SNOWBALL PROBLEM?
The text proposed by the government and approved by Congress provided for the so-called “account meeting”, in which creditors could use the amounts receivable in court orders to reduce obligations with the Union, whether they were tax debts or payment of auction grants.
The modalities of the agreement were regulated during the Bolsonaro administration, but did not take off amid the legal uncertainty alleged by the Lula government to accept these credits. The AGU revoked the previous ordinance and created a working group to discuss the new standard.
A draft was sent to the Ministry of Finance proposing the acceptance of the meeting of accounts up to a certain limit.
In a more recent position, however, government technicians claim that the use of the instrument threatens predictability and budgetary and financial planning, since the Executive may be surprised by a sudden reduction in federal revenue due to a more intense use of compensation.
HOW DOES THE LULA GOVERNMENT INTEND TO RESOLVE THE IMPASSE OF PRECATORIOS?
Minister Fernando Haddad (Finance) intends to “de-pedal” the stock of court orders and resume paying these obligations on time.
To this end, the AGU (Attorney General’s Office of the Union) filed a request with the STF to declare the unconstitutionality of the court-ordered ceiling and the “accounting” instruments that allow the use of judicial debts to reduce debts with the Union.
WHAT WILL BE THE STRATEGY TO REGULARIZE PAYMENTS?
The Lula government proposes a series of measures to resolve the accumulated stock of court orders, estimated at around R$95 billion, as well as the future flow of these payments.
The main one foresees classifying the charges that correct the original value of court orders as financial expenses (a category linked to public debt service), which would leave this portion of the expenditure outside the reach of the new fiscal framework and the primary result target (which disregards debt interest expenses).
Furthermore, the stock held up to date would be paid for via extraordinary credit, which is also free from the current spending limit for 2023.
WHY DOES THE GOVERNMENT WANT TO CLASSIFY PART OF PRECATORIES AS FINANCIAL EXPENSES INCLUDING IN THE FUTURE?
The spending limit created by the new fiscal framework is limited to a percentage between 0.6% and 2.5% above inflation per year. However, legal debts end up growing at a faster rate than this.
Therefore, government technicians state that simply removing the stock of court orders from the reach of current fiscal rules would not be enough to resolve the impasse. The reclassification of part of court sentences as financial expenditure, outside the scope of fiscal rules, helps to reduce pressure on the limit.
WHAT WAS THE COMPLETE LIST OF REQUESTS FROM THE GOVERNMENT TO THE STF?
1. Authorization to redistribute the stock of court orders between primary and financial expenses, “through approximate parameterization”, within a period of up to 60 days
2. Determination to the competent bodies that the issuance of court orders in the future must indicate, separately, the main values and those referring to financial charges on the case, so that they are paid as primary and financial expenses, respectively
3. Recognition of the urgency and unpredictability of immediate payment of the accumulated stock of court orders via extraordinary credit (with the exception of the amounts already provided for in the 2024 budget proposal)
4. Removal of any legal and constitutional limits or fiscal constraints to comply with any STF decision
5. Authorization for the bodies responsible for budgetary and financial execution of the Union and for calculating fiscal statistics to give expenses with charges levied on the cause the same treatment given to charges levied on public debt securities
6. Determination that the adoption of the measures necessary to comply with the decision cannot give rise to non-compliance with any established fiscal targets
7. Authorization to regularize the payment of Fundef court orders, owed to states and municipalities, using the same rules required for other judicial debts
The post Understand what is at stake in the discussion of court orders appeared first in Jornal de Brasília.
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