Senate approves project that halts government spending in the event of a deficit

This Thursday, the Senate approved the project that imposes restrictions on the growth of personnel expenses and tax incentives in the event of a primary deficit, an issue seen as a priority by the government in its fiscal effort.

The project, whose main text was approved by 72 votes to 1, is now awaiting presidential approval.

Part of the Executive’s set of fiscal adjustment measures, the proposal concluded its processing in the Chamber of Deputies on Wednesday and received the approval of senators this Thursday.

Parliamentarians are rushing to approve fiscal adjustment measures and budgetary matters before the parliamentary recess, with the official start scheduled for December 23rd.

In order to discipline Executive spending, the project authorizes the contingency and blocking of up to 15% of parliamentary amendments, but only those that are not binding. It also repeals the law that deals with Compulsory Insurance for the Protection of Victims of Traffic Accidents (SPVAT), another point that had raised controversy among deputies.

It also allows the use of surplus funds to pay public debt from 2025 to 2030.

According to the text, when the central government’s primary deficit occurs, there will be an impediment to the granting, expansion or extension of incentives or tax benefits. The rule will be valid from the calculation of the 2025 fiscal result.

Until 2030, even in the case of a primary deficit, the growth in government spending on personnel will be limited to a real increase of 0.6% per year.

The same triggers will be activated from 2027 in the event of a reduction in discretionary expenses, which include administrative and investment disbursements, which have been compressed by the increase in mandatory expenses, such as social security benefits.