Most of the cutback will fall on transfers to states and municipalities

National Congress approved on Thursday (18) the Union’s Budget for 2009, with a cutback on gross revenues of R$3.6 billion compared to the original bill proposed by the government (PLN 38/08). The matter follows now to presidential sanction.

The cutback proposed by the Budgeting Joint Committee was R$6.1billion, but it was changed by an errata presented at the House Floor by its rapporteur, Senator Delcídio Amaral (PT-MS), because some ministries resisted to it. Most of the cutback of R$3.6 billion will fall on transfers to states and municipalities.

Reviews
In 2008, congresspeople have had to make cutbacks in the budget because of the possible effects of the global financial crisis on tax collection. The government, though, should review again the figures after the sanction of the bill, since new changes have been performed at the tax structure, such as the ones promoted by the Provisional Measure 451/08, which modified the Income Tax for individuals.

The Union’s Budget just authorizes the government to make expenditures. The Executive can therefore limit expenses, waiting for the confirmation of the expected collection, the so called “allotment”. The Tax Responsibility Law (Complementary Law 101/00) allows that review to be made every two months.

Assets’ sale
Part of the resources’ recovery to the ministries – made at the House Floor – was determined by an official letter by the ministry of Planning, Paulo Bernardo, to the rapporteur. He asked that R$2.5 billion from the sale of assets of the Federal Railway Network (RFFSA) be included in the budgeting bill. According to the minister, that sale was expected for 2008 and therefore was not included by the very government in the budgeting document.

The amount was then allocated by the senator to a “tax stabilization reserve”, which will be later transferred by the Executive to the ministries which lost with the cutbacks made by the joint committee. The cutback on the grant to the Education Ministry was R$1.1 billion, and the one to the Science and Technology Ministry was R$ 674,000,000.

That solution was criticized by some congresspeople, because the recovery will be made by the government and will depend on the sale of assets. The senator Delcidio Amaral affirmed, though, that in the case of Science and Technology, great part of the resources will come from the revenues from oil royalties, which should actually undergo a reduction, due to the drop in the price of the barrel.

Primary surplus
Delcídio Amaral explained also that there was a “technical mistake” in the distribution of resources, which caused Social Security to lose R$1.5 billion. Since these resources were eventually allocated into other areas, the rapporteur adjusted the goal on primary surplus of the government.

The target of the central government (tax and security budgets) dropped from 2.2% of the Gross National Product (PIB) to 2.15%, allowing the necessary resources to Social Security. To compensate that, the goal of the states’ companies grew from 0.65% to 0.7%.

Government adjustments
The rapporteur also reviewed its initial intention, which had been approved at the joint committee, and which was to restrain the possibility of changes in the Budget by an Executive Decree. According to the committee’s review, the Executive could change 10% of the programs unilaterally, in addition to the investments, included in the Pilot Project of Investments (PPI), since it did not alter the changes performed by the Congress.

But the errata excluded the conditions made to the parliamentary amendments. “Because of the crisis, government needs to have more freedom to promote adjustments in the Budget”, explained the rapporteur.

Individual amendments
Anyway, Deputy José Carlos Aleluia (BA), head of DEM at the joint committee, criticized the errata, and affirmed that it could destroy all work done by the congresspeople. The rapporteur made then another change, taking the individual parliamentary amendments from the discretionary from the Executive.

The individual amendments are a quota granted to congresspeople (deputies and senators) to direct resources from the Budget of the Union to determined areas, inside programs in the federal government. The mechanism is based on the idea that the congresspeople are closer to the local needs and can contribute to a resource allocation that is more adequate to the interest of the population they represent.

Cutbacks and transferences
With the changes made at the House Floor, the 2009 Budget of R$1.6 trillion contains R$11 billion on cutbacks and transfers of resources, compared to the original bill sent by the Executive. Most of the changes were made to accommodate amendments from congresspeople, both individual and collective (states caucuses and committees). The expenditures with personnel were reduced in around R$400,000,000; the investments, in R$1.2 billion; the funding expenses, in R$ 7 billion; and expenses with interests of the public debt, in R$2.3 billion.

The head of the government at the joint committee, Deputy Gilmar Machado (PT-MG), explained that the cutbacks were made in expenditures with advertising and trips, for instance. “In the case of expenditures with personnel, there will only be a delay. Contracting that would be made in the first semester, can be postponed to the second”, he affirmed.

Report - Sílvia Mugnatto
Editing - Marcos Rossi/Rejane Xavier
Translation – Positive Idiomas Ltda