"We will pursue a positive agenda despite lower revenue."

Carolina Gonçalves
Reporter from Agência Brasil

Brasilia – Deputies and senators return to work in 15 days with the challenge of finding a balance between the confirmation of a less optimistic economic scenario and the pace of voting on the so-called positive agenda from the streets, which includes measures that reduce government revenue. The signal given yesterday (22) by the government's economic team, which recorded a drop in the forecast for economic growth and the suspension of several expenses, may strain decision-making. The projection published in the Revenue and Expenditure Assessment Report – which presents the estimate of public revenue every two months – was reduced from 3,5% to 3% this year.

According to Senator Walter Pinheiro (PT-BA), the government's representative on the Congressional Budget Committee, lawmakers will have to try to harmonize the proposals being processed in both Houses with the reduced revenue. The challenges to reaching a consensus lie in matters such as the free public transportation pass, which provides free public transportation for all elementary, middle, and high school students. "We have to take advantage of these days to analyze how we will position ourselves. We need to analyze, for example, what we will do with the free public transportation pass, which will have to be adjusted to the budget. We cannot take the resources [to fund the exemption] from the royalties that are awaiting a decision on the allocation of resources to the areas of health and education," explained Pinheiro.

The parliamentarian recalled the debate surrounding other matters such as Provisional Measure 610, which provides for the exemption of payroll taxes for various sectors and creates relief measures for producers affected by drought. "The measure has a significant portion of tax relief that impacts revenue collection and, on the other hand, a reasonable portion to benefit the agricultural sector. This points to a different perspective on the Budget Guidelines Law and the 2014 Budget," he said.

In two days, senators from the PT (Workers' Party) caucus will meet to discuss the agenda for the resumption of work in the Senate. According to Walter Pinheiro, negotiations on the Budget will be at the top of the debates. On the 6th, deputies and senators who make up the Joint Budget Committee will meet again to try to reach an agreement on the goals and priorities for public spending for next year. The rules of the LDO (Budget Guidelines Law) are used by the government as a basis for preparing the Budget. They should have been voted on by the 17th, but parliamentarians failed to reach a consensus.

The main obstacle to the approval of the law was the negotiation surrounding the Proposed Constitutional Amendment on Mandatory Budgeting, which would impose mandatory targets, preventing parliamentary amendments from becoming subject to spending cuts if the government needs to make expenditure reductions.

Walter Pinheiro said that it will be necessary to reach an agreement with the government to try to harmonize the tax relief measures and the less robust revenue collection. "We need to see how to conduct a thorough review and see where to cut so as not to sacrifice investments and social policies," he said. However, the parliamentarian rejected the idea of ​​a mandatory budget. "We need to understand that the budget has to consider what revenue is imposing at the moment when the economy fluctuates independently of our will. A mandatory budget could mean that every year we have to develop a new target plan, and what do we do with the PPA [Multi-Year Plan]? We have to consider that the PPA is a four-year plan that was not formulated solely by the Executive branch. The Legislative branch had a lot of participation," he explained.

The revision in the country's growth forecast led to the announcement of the second budget cut of the year. This time, it will amount to R$ 10 billion. In the coming days, the economic team will define limits so that almost half of the savings are guaranteed by reducing spending on daily allowances, travel expenses, cleaning and security services, vehicle and machinery purchases, and electricity consumption. The other portion of the cuts (R$ 5,6 billion) will come from other expenses, such as reduced hiring, which may mean postponing hiring through public competitions.

Edited by: Beto Coura