Reporter of the ‘Golden Rule’ denies Guedes’ request for indebtedness

Reporter of the golden rule denies Guedes' request for indebtedness

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Rapporteur of the bill that makes the golden rule more flexible, the Deputy Hildo Rocha (MDB-MA) rejected request from andteam of Economy Minister Paulo Guedes, to go issued R$135 billion in public debt bonds this year. Rocha’s opinion complicates the government’s fiscal scenario, which will have even more difficulty in closing the 2021 accounts.

In the original request, recalls O Globo, the government said it needed to incur debts of R$ 164 billion to cover day-to-day expenses, such as salaries of civil servants. “But, for the rapporteur, only BRL 28 billion are justified.”

Debt limits are established in the so-called golden rule, which prohibits the government from issuing bonds to pay current expenses. When it needs to go into debt to pay for this type of expense, the Executive has to ask Congress for authorization.

“According to the Ministry of Economy, if it is unable to raise the BRL 164 billion on the market, the government will not be able to pay for expenditures foreseen in 16 ministries and even in the Presidency of the Republic, in addition to transfers to states and municipalities that depend on congressional authorization. In internal conversations, the economic team says that if it cannot issue this amount, it can only keep the public machine running until the beginning of October.”

Hildo Rocha claims that the government is collecting more than expected — Guedes himself announced last week a collection of BRL 270 billion above forecasts. “Since it is having excess revenue, the government no longer needs to borrow money to pay for expenses such as airline tickets and food at events. If you have money, why borrow it at an interest rate of 11% a year?.”

The rapporteur also removed from the original text sent by the Economy a provision that gave flexibility to the economic team to reallocate the money from the sale of the bonds.