BRASILIA – Before the elections, Federal Senate put on the agenda the resumption schedule of projects on the economic agenda. It is an attempt to respond to the worsening uncertainties in relation to the economy and to paralysis in the face of municipal elections and the fiscal impasse.
There are two movements: first, the vote scheduled for November 3 for two projects to shield the central bank (autonomy and creation of voluntary deposits), to show that the BC will not “run the machine” of money and that interest and inflation rates may remain low for a long period.
On the 4th, the vote of presidential vetoes to the sanitation law e one-year extension of companies’ payroll tax relief, and projects for the reallocation of resources between ministries. The bankruptcy law vote was postponed to November 5th.
The second movement is fiscal and begins on the next day of the election (16): the target will be to cut 12% to 15% of the waivers to obtain from R $ 36 billion to R $ 45 billion in revenues that will finance the new social program government and increase investments. Another proposal is to exceptionalize regional incentives, and to cut up to 17% of other waivers and subsidies.
The schedule is organized after the president of the Chamber, Rodrigo Maia, defend an agreement to touch the economic agenda and criticize the Senate’s suspension of the agenda by the President of the House, Davi Alcolumbre (DEM-AP), in negotiations to make his reelection feasible in 2021. On the economic side, the concern is with the increase in indebtedness, public debt financing and now also with the risk of high inflation.
As increasing revenues by cutting waivers does not solve the problem of restricting the spending ceiling (the rule that prevents expenditure growth above inflation), the measure will be combined with spending cuts, with the joining of current programs, such as salary allowance, closed insurance and other programs. This proposal was discarded by the president Jair Bolsonaro, but returned to negotiation. It is estimated that the public benefiting from the new program will have to raise at least 14 million families to 20 million.
“It won’t take off the ceiling. There is no one wanting to finance any debt increase expenses. Everyone is working to make the measures neutral from a fiscal point of view, ”he told the Estadão the government leader, Fernando Bezerra (MDB-PE), who participated in the negotiations this week to close the schedule. “Have no doubt that all the bitter measures will return to the debate,” he said.
Clear the agenda
The leader says that the strategy is to clear the agenda and the pending issues so that, after the elections, the Congress can focus on fiscal measures. Bezerra guarantees that there are already “free” votes for approval in the first week of the first voting block. The project that creates voluntary deposits to replace repo operations, is PTsenator Rogério Carvalho (SE), although the party will vote against the BC’s autonomy. Voluntary deposits will have the same role as repo operations used in the management of monetary policy to control the amount of money and maintain Selic at the level that was set. The difference is that the commitments are backed by bonds and deposits are not, which should reduce the level of gross debt.
“It will have a very strong repercussion because monetary policy (the calibration of the basic interest rate to control inflation) will be shielded. There is no need to touch the machine, we will have the security of inflationary control and a low interest environment for a longer period than could be expected, ”said Bezerra. According to him, the vote on the new Bankruptcy Law will be an important message for all companies that are experiencing difficulties due to the coronavirus. The idea is to vote on the project without having to return to the Chamber for a new vote.
The problem, according to the economic team’s diagnosis, is that the current judicial reorganization format does not work in Brazil. The average duration of a completed bankruptcy is 6.7 years, but half is open for 13 years. Among the processes initiated and not yet closed, the oldest was 36.3 years old on the date of the last survey, made in 2014.
In the tax area, the leader says that the biggest target is resignations because the country is unable to give up R $ 300 billion (4% of the START) per year of revenue. He said that the cut in linear waivers resolves the financing of the new program – another R $ 20 billion to R $ 25 billion and the rest can guarantee an increase in investments next year, which are expected to be only R $ 28 billion.
Bezerra points out that the increase in investments is a demand from parliamentarians and that Alcolumbre surprised with this voting schedule. He countered fears that if there is no room to cut the resignations. . “This is not the environment. What we’re building and we have to give credit to Rodrigo, who comes with all the letters and the minister Paulo Guedes also, is that the exit has to be made at the expense ceiling ”, emphasizes the leader.