Brazil’s Transition PEC: Senate CCJ approves proposal that expands spending cap by US$27 billion

On Tuesday afternoon (Dec. 6), the CCJ of the Federal Senate approved the spendthrift (transition) PEC (constitutional amendment) of Lula da Silva (PT, progressive-globalist).

The proposal includes an extension of the spending cap by R$145  (US$27) bill for two years so that Brazil Aid (future Bolsa Família) will be R$600 per month next year.

The text was approved with three main changes in relation to the initial version proposed by the government transition:

The amount outside the spending cap for Bolsa Família dropped from the initial R$175 billion to R$ 145 billion:

• The period of validity of this Bolsa Familia outside the ceiling was increased from four to two years;
• The deadline for the elected government to submit to Congress a proposal for a “new fiscal regime” was increased from one year to seven months.
• The PEC guarantees a margin in next year’s budget to maintain the R$600 monthly allowance, starting in January.

Lula da Silva has also promised an additional R$150 for each child up to 6 years old in the family.

The Workers’ Party (PT) team also hopes to use part of the PEC’s budgetary slack to honor other campaign promises – Popular Pharmacy, readjustment of school lunches and the minimum wage, and resumption of popular housing programs, for example.

The rapporteur of the PEC, Alexandre Silveira, foresees, in his opinion the expansion of the spending cap.

This increase will be a maximum of R$ 145 billion – R$ 30 billion less than the amount estimated to fund Bolsa Família.

The PEC does not obligatorily link these resources to Bolsa Família.

The text leaves the money “loose” without a stamp, which could open the door for parliamentarians to reallocate the money in next year’s budget.

Initially, Silveira included in the report the R$175 billion limit proposed by the elected government to expand the spending cap.

The amount corresponds to the total budget for the Bolsa Família program planned for next year.

After a request by congressmen allied to Bolsonaro, the amount was reduced.

According to the project, another fiscal anchor should replace the spending cap. The PEC sets a deadline of seven months, until August 2023, for the solution to this debate.

The annual impact of the PEC is R$168.9 billion per year since the text also allows the use of R$23 billion in investments already this year.

This increase is the only part that will remain outside the ceiling, unlike the R$145 billion.

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