Chamber approves the basic text of the Transition PEC in the first round

The plenary of the Chamber of Deputies approved, this Tuesday (20), with 331 votes in favor and 168 against, the basic text of the Proposed Amendment to the Constitution (PEC) of the Transition in the first round. There remains the conclusion of the analysis of the highlights presented by the party benches and the second round vote on the matter.

The president of the legislative house, Arthur Lira (PP-AL), called a new session for 10 am (Brasília time) on Wednesday (21) to conclude the analysis of the PEC.

As there are changes in relation to the version approved two weeks ago by the Federal Senate, the proposal, if approved by the Chamber of Deputies in the second round, will need to be submitted to another round of analysis by the senators.

The text is considered a priority by the team of the president-elect, Luiz Inácio Lula da Silva (PT), to guarantee resources for the payment of Bolsa Família with installments of R$ 600.00 and an additional R$ 150.00 to families with children up to six years of age, in addition to a real readjustment of the minimum wage and other commitments undertaken during the election campaign.

The amendment maintains important points approved by the Federal Senate, such as the expansion of the spending ceiling – a fiscal rule that limits the evolution of public expenses in a fiscal year to the performance of inflation in the previous year − by R$ 145 billion in 2023.

In the original version of the PEC, filed by Senator Marcelo Castro (MDB-PI), who is also the general rapporteur for the 2023 Budget, the government would be authorized to remove all expenses with Bolsa Família from the spending ceiling for an indefinite period.


During the procedure in the Senate, the norm was changed to increase the R$ 145 billion outside the ceiling and maintain the social program within the limitations of the fiscal anchor. In addition, the deadline for exceptionality was reduced to two years.

Elmar Nascimento’s report also includes five articles that seek to ensure the reallocation of the R$ 19.4 billion foreseen for the “rapporteur’s amendments” in the 2023 Budget. The device was declared unconstitutional by the plenary of the Federal Supreme Court (STF) yesterday ( 19).

The text establishes that individual congressional amendments to the budget bill will be approved within the limit of 2% of net current revenue for the fiscal year prior to the project being forwarded, half of which will be allocated to public health actions and services.

Of this amount, 1.55 percentage points would be distributed to federal deputies and 0.45% to senators. Currently, the Federal Constitution establishes a limit of 1.2% of the expected net current revenue for the allocation of individual amendments.

The substitute also emphasizes that it is considered “equitable the execution of mandatory programs that observe objective and impartial criteria and that respond equally and impersonally to the amendments presented, regardless of authorship”.

The text also says that the balances to be paid from parliamentary amendments may be considered for the purpose of complying with the financial execution up to the limit of 1% of the net current revenue for the year prior to the submission of the budget bill in the case of individual amendments and of 0.5% for amendments by state and Federal District caucuses. Today, the Federal Constitution establishes the respective limits of 0.6% and 0.5%.


The report also authorizes the government to use the money forgotten by workers in PIS/Pasep quotas as primary revenue for the National Treasury.

The text approved by the senators allowed the resources to be used for investment expenses, outside the limitations imposed by the spending ceiling. The new version, therefore, the effect of raising expenses. According to Caixa Econômica Federal, the amount reaches R$ 24 billion.

As it is a PEC, the text needs to be submitted to two rounds of voting, with a minimum support requirement of 3/5 of the votes available in the legislative house (that is, 308 of the 513 deputies) in each one.

If the deputies approve a version different from the one analyzed by the senators, the proposal needs to be analyzed again by the Federal Senate in full or “sliced”, with the points in common being able to go to the enactment by the National Congress.

In his text, the rapporteur Elmar Nascimento maintained the possibility of an additional R$ 23 billion in public investments in situations of “excess revenue”, referring to the comparison between the result obtained by the government and the projection of the budget piece.

As a parameter, the text establishes that the values ​​could not exceed 6.5% of the collection exceeded the forecasts of the budget law in 2021. Initially, the measure would only come into force from 2023, but a change in the text from the opinion of the senator Alexandre Silveira opens up the possibility of the instrument being used later this year.

The measure can help the Bolsonaro government in the midst of budget blockages amid a lack of resources in key areas and even avoid the risk of having its accounts rejected by the Federal Audit Court (TCU) – which could have administrative consequences.

By increasing fiscal space, room is opened up in the budget for expenditures on health and education, in public policies such as the Popular Pharmacy program, school lunches and the construction of popular houses from the resumption of Minha Casa Minha Vida. The elected government also promises a real readjustment of the minimum wage for the first year of management.

The space can be even greater, considering that the text foresees that expenses of federal educational institutions funded by their own revenues, donations or agreements entered into with other entities of the federation or private entities, would also be excluded from the ceiling.

This also applies to expenses with socio-environmental projects or those related to climate change, within the scope of the Executive Branch, funded by donations. And for expenses of scientific institutions funded by own revenues.

Also included in the list were appeals resulting from judicial or extrajudicial agreements that originated from environmental disasters. An example would be a possible agreement in which Vale would compensate the Union for the Mariana disaster.

Deputy Elmar Nascimento’s report, on the other hand, removes a section that excludes from the expenditure ceiling expenditures defrayed from financial operations with multilateral organizations of which Brazil is a member, intended to finance or guarantee investment projects in infrastructure, contained in the Integrated Transport Plan and considered a priority by the sector’s collegiate body.


The rapporteur for the PEC in the Chamber of Deputies also opted to maintain a device that forces the new government to forward to the National Congress a proposal for a new fiscal framework, in the form of a complementary bill, by August 31, 2023.

Another point that follows in the text is the extension of the Untying of Union Resources (DRU) until the end of 2024, allowing the government to reallocate budgetary funds.

The text provides for the untying of up to 30% of the collection of the Union “related to social contributions, contributions for intervention in the economic domain and fees, already instituted or that may be created by the said date”.

The proposal also excludes from the scope of the Tax on Transmission Cause Mortis and Donation (ITCDM) donations destined, within the scope of the Executive Branch of the Union, to socio-environmental projects or those intended to mitigate the effects of climate change, and to federal institutions of teaching (IFEs).

Another present point is the inclusion of the Gás dos Brasileiros program in the fiscal “waiver” (that is, in the license to spend). In this way, it would not be necessary to observe, in 2023, the legal limitations regarding the creation, expansion or improvement of governmental action, including the need for compensation.

There are only two days left for the formal start of the parliamentary recess and the Lula government is racing against the clock to unlock the proposal in the National Congress. One of the difficulties faced is the pressure from deputies for spaces in the new management.

Another element that influences the vote on the matter involves two decisions of the Federal Supreme Court (STF). The first, authored by Minister Gilmar Mendes, opened the possibility for Bolsa Família to be funded with resources from precatories that will no longer be paid due to the new rules (Constitutional Amendment 114, of 2021) and with extraordinary credits.

In the evaluation of specialists, Gilmar Mendes’ decision changes the terms of the negotiation between Lula’s team and the National Congress. But the dispatch does not release the volume of resources requested by the new government in the PEC (today at up to R$ 168 billion) and does not meet the desired time window (at least two years).

In the second, the plenary of the Court declared, by 6 votes to 5, the unconstitutionality of the rapporteur’s amendments (RP9). The instrument became known as the “secret budget”, due to the lack of transparency in the authorship of the requests, the difficulties in monitoring the application of resources and the alleged violation of the principle of impersonality.

Despite the victory in the Judiciary, Lula chose to maintain the strategy for the approval of the Transition PEC, since the device would bring more comfort to his beginning of the mandate − even though it represents a greater political challenge and the text has suffered further dehydration in the Chamber.

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