The model being discussed by the government foresees that 20% of the proceeds of a privatization or sale of assets will be destined to the bonus to the beneficiaries of the new Bolsa Família, 20% for the payment of precatório in installments and the remaining 60% for abatement of the public debt.
Two privatizations are already certain to have revenues linked to this fund: the sales of Eletrobras and Correios. The fund will also include property sales and dividends from profitable state-owned companies.
The government believes that the fund will be a way to encourage and overcome resistance to privatization in Congress and in the Judiciary. The assessment is that it will be difficult to vote against a state-owned sale knowing that the value will be used for the most vulnerable.
Executive sources argue that, as this is a non-recurring expense linked to non-recurring revenue, there will be no problem in paying the amounts outside the ceiling. Within the government, including the fund in this PEC is seen as an opportunity to accelerate privatizations and reduce the size of the state.
The PEC, anticipated by GLOBO on Monday, materializes the idea of Economy Minister Paulo Guedes to create what he calls the “Brazil Fund”. This fund, which will not have that name, will be supplied with the sale of federal assets and privatization of state-owned companies, dividends and concession revenues.
The new social program will be proposed to Congress, probably later this week, but still without values. The average benefit amount should rise from R$192 to R$300 monthly. The number of beneficiaries will also rise, from 14 million to 17 million.
The value of R$ 400, suggested by the president, should not materialize. The total cost of the benefit next year should be R$56 billion (today there are around R$30 billion per year). The bonus will therefore be in addition to these monthly amounts.
To give a mark to the Jair Bolsonaro government and disassociate the benefit of the PT governments, the new Bolsa Família will be called “Brazil Aid“. It is a way of referring to emergency aid, paid on account of the Covid-19 pandemic. The new Bolsa Família is seen as fundamental to the Bolsonaro campaign in 2022.
The proposal to pay the “bonus” to Bolsa Família will be included in the PEC that will allow the payment of court sentences. Without the PEC, the government would need to pay around R$90 billion in 2022 because of court rulings that it can no longer appeal. This number represents an increase of 62% compared to the value forecast for this year (R$ 54.7 billion) and which was already growing above inflation.
The payment of court orders would consume all the space needed for Bolsa Família and would also reduce the amount of other non-mandatory expenses, such as investments. Therefore, the government will propose a PEC to pay its legal debts in nine years (in addition to a 15% down payment).
Missile against meteor
The Economy Minister, Paulo Guedes, came to classify the growth of the precatório as a “meteor” and the PEC as a “missile” to contain the problem.
The “superprecatórios”, judicial debts above R$66 million, will be paid in installments. The text also creates a special regime for the payment of judicial debts until 2029.
The PEC limits the total expenditure on court orders to a percentage of 2.6% of the current net revenue (available to spend) accumulated 12 months before the order for court orders. It’s a way of delimiting how much can be paid in a year. By this rule, only court orders below R$ 455 thousand will be paid in cash.
The idea behind the proposal is to bring the value of court orders closer to this year’s level, of R$ 54.7 billion. The space to be created next year is R$ 40 billion. As the processing of a PEC in Congress is delayed, the 2021 Budget must be proposed by the government on August 31 without considering the effects of the measure.
The PEC is also going to provide mechanisms for the government to hold accounts in relation to sentences that benefit states, municipalities and companies.
In the case of states and municipalities, the proposal will allow liabilities to meet. For example, a court order that benefits a state could be used to offset its debt to the federal government.
As such, neither party will need to make disbursements. In other words, if a state has a precatório of R$ 5 billion, it will be able to use this amount to pay the debt with the federal government.
Government officials have said that some of the court decisions have non-recurring characteristics and have turned into billion-dollar debts.
An example of this is the discussion about the Fund for the Maintenance and Development of Elementary Education and the Valorization of Teaching (Fundef) in the states, a skeleton that dates back to the Fernando Henrique Cardoso government and has only just taken a decision.
The expenses related to this liability increased by R$ 17 billion to the total court-ordered account in 2022. Source: Extra Globo