Fiscal framework will have transition to replace education and health losses

The new fiscal rule will have a transitional regime to replace losses in education and health after the entry into force of the spending ceiling, said on Tuesday night (21) the Minister of Finance, Fernando Haddad. He also spoke out in relation to a postponement of the submission of the proposal to the beginning of April. The minister was calm about the matter and added that the ministries of the economic area have already adjusted the “details” requested by President Luiz Inácio Lula da Silva.

“We are coming out of a very strict rule, which takes away a lot of resources from health and education. We need to imagine a transition to the new framework that includes replacing the losses of the two sectors”, said Haddad upon leaving the Ministry of Finance.

The minister clarified that the complementary law of the new framework allows the creation of the transitional regime without the need for a new proposed amendment to the Constitution (PEC). He also pledged simplicity and transparency regarding the new fiscal framework. “Our intention is a simple rule that can be followed very easily”, highlighted Haddad.

postponement

According to Haddad, both the economic team and the Civil House made the last changes and the new draft of the bill is ready to be resubmitted to President Lula. “Why did I decide (to postpone the proposal)? Because it is necessary to discuss a little more, ”he said. “We don’t have to be in a hurry that some people in the financial sector want. I’m going to do the fiscal milestone and I want to show the world that I have responsibility, ”he added.

Regarding the disclosure of the proposal for after Lula’s official trip to China, the minister stated that the postponement will allow the economic team to be available to explain the proposal. “(The presentation of the project) should take place after the trip to China because President Lula wanted me to be available over time, after the disclosure, to society for clarifications. If we publicized a lot about the trip, I wouldn’t be there, “he justified.

Binding

Linking revenues and expenditures is one of the problems that the government has to solve in the preparation of the new fiscal framework. In addition to linking certain types of revenue to certain expenditures, the Constitution establishes minimum expenditures for health and education.

Before the spending ceiling, the values ​​were defined according to the net current revenue of the federal government. After the cap, the minimum limits for health and education began to be adjusted annually by inflation according to the value implemented in 2016. The government understands that, as the new fiscal rule will annul the spending cap, as provided for in the constitutional amendment of the Transition , the rule that was in force until the end of 2016 will again apply.

“The Constitution itself says that, as soon as the complementary law with the new fiscal framework comes into force, the transition will be automatically valid”, clarified Haddad.

Public-Private Partnerships

In addition to the fiscal framework, the plan to contain government debt and public spending in the medium and long term, the Treasury is preparing new legislation for public-private partnerships (PPP), projects carried out with government and private initiative resources. Despite informing on Tuesday (20) that the new PPP legislation would be presented together with the new frameworkHaddad said that it will be up to President Lula to decide whether the two texts will be sent together to Congress.

“I asked the Treasury and the PFGN (Attorney General of the National Treasury) to accelerate the PPP regulatory framework because we intend to present a process of accelerating investment, especially when it has the backing of the public and private sector. This gives us comfort to leverage investments”, he added.