The Chamber is reviewing the Provisional Measure 452/08, which changes the rules for the Brazilian Sovereign Fund (FSB). The text authorizes the Union to issue government securities in favor of the fund, without their quotation in a budgeting law which is previously approved.

The MP also allows the resources coming from government securities be part of the quotas of the Union at the Fiscal Fund of Investments and Stabilization (FFIE), a kind of management fund of FSB. The law on the creation of FSB (Law 11.887/08) expressly prohibited that operation, but the MP revoked that prohibition.

In the practice, that operation will work so as the resources of 2008, forecast for the fund, are transferred to FSB, but the MP already guarantees that National Treasury can recover the securities at their market price. If a new credit in favor of the Fund is approved, the securities can be redeemed in the long run.

The Sovereign Fund was created to finance strategic undertaking projects from Brazil abroad and to soften the effects of the drops in global economic activity, such as the ones verified at the current crisis.

Credit
According to the government, the edition of the MP was necessary, because the Congress approved the law on the establishment of FSB, but the destination of a supplementary credit of R$14,200,000 for the fund was not approved in time. The opposition promised to obstruct the voting, if the project were included in the agenda, which prevented the resources allocation still in 2008.

According to the Executive Power, the result was the creation of a fund without funds. The government’s solution was the edition of the MP, published in the same issue of the Official Gazette, in which the recently sanctioned law was.

Opposition
When the Law of FSB was discussed at the Chamber, the opposition tried to exclude from the text the use of government securities for the fund allocation, but the possibility was maintained in the approved text; the difference is that the MP now excludes the need of a budgeting law to approve resources of that nature for the fund.

DEM, PSDB and PPS decided to file a Direct Lawsuit on Unconstitutionality (ADI), with a request for an injunction, against the MP. The opposition argues that the Congress has already clearly expressed that they do not agree with the destination of resources for the fund at this moment.

Procedure
The MP will lock the agenda of the House where it is being processed (Chamber or Senate) from March 19th, 2009.