Chamber votes second round of PEC dos Precatório this Tuesday (9)

The Chamber of Deputies must vote this Tuesday (9) the second round of the Proposal for Amendment to the Constitution (PEC) of the Precatório. As a rule, the proposal requires voting in two rounds, with the approval of at least 308 parliamentarians, to, if approved, proceed to the appreciation of the Senate.

Deputies need to vote on the highlights presented by the parties in an attempt to change parts of the text approved in the first round vote, held at dawn on Thursday (4), when the proposal was approved by 312 votes to 144.

These votes include the main points of the PEC, such as limiting the amount of annual expenses with court orders, changing the way to calculate the spending ceiling and the priority of payment of court orders from the former Fund for the Maintenance and Development of Elementary Education and Enhancement of the Magisterium (Fundef).

According to the text approved on Thursday (4), the court orders for the payment of debts of the Union relating to the former Fundef must be paid with priority in three years: 40% in the first year and the remainder of 60% of an amount of R $16 billion would be paid in the years 2023 and 2024: 30% each year. This priority will not only apply to payments for the elderly, people with disabilities and people with serious illness. The states that concentrate these judicial debts are Bahia, Ceará and Pernambuco.

Bill 10880/18, which regulates the application of resources obtained from court orders by states and municipalities relating to the former Fundef and Fundeb (the current one and the one in force until 2020) was urgently approved in the session on Monday (8th ).

According to the replacement of deputy Idilvan Alencar (PDT-CE), by the Education Commission, the money will be distributed according to the rules for apportioning the two funds.

The project, authored by former deputy JHC (AL), provides that the resources will pay the remuneration of professionals in basic education and expenses with maintenance and development of education, such as the acquisition of teaching materials and maintenance of school facilities.

The basic text of the Proposal provides for payment in installments of the precatório, which are debts of the public power that have already had payment determined by the Court and, therefore, can no longer be contested and must be complied with.

For this reason, the opposition and economists have stated that the payment in installments and the consequent non-payment of part of the court-ordered debts constitute a default by the Union with its creditors.

The government claims that the measure is necessary to cushion a significant and unexpected increase in these debts: the value of court-ordered debts due in 2022 totals BRL 89.1 billion, compared to the BRL 54 billion estimated for 2021.

Another point of contention of the PEC was an approved amendment that also substantially alters the spending ceiling rule – the change was requested by the federal government to support the new Auxílio Brasil with a minimum value of R$ 400 per month until the end of next year.

The spending cap is a fiscal rule created in 2016 that limits the increase in annual federal budget allocations to the inflation of the previous year. Until now, the ceiling limit was annually adjusted by the Extended National Consumer Price Index (IPCA) accumulated until June of the previous year. With the new methodology, the ceiling will be adjusted for inflation from January to December of the previous year.

The combined impact of postponing court orders with the change in the ceiling bill should open up extra space to spend up to R$91.6 billion more next year, according to new estimates released by the Ministry of Economy on Friday (29).

As it only changes a formality in the limit, but does not say where it will get the money, the practical result will end up being an increase in expenditure and an increase in debt.

*With Agência Câmara de Notícias and information by Juliana Elias, from CNN Brasil Business.