Constitutional Amendment of the Public Expenditure Cap Explained

The public expenditure cap is a crucial aspect of our country's financial management system. It limits the government's ability to overspend, ensuring that public funds are used efficiently and effectively.

The current public expenditure cap is set at 20% of GDP, which translates to approximately $20 billion annually. This cap has been in place since the introduction of the constitutional amendment in 2015.

Exceeding the public expenditure cap can have severe consequences, including the imposition of penalties and the requirement to repay excess funds. This serves as a deterrent to governments from engaging in reckless spending.

In practice, the public expenditure cap has helped to reduce the country's debt-to-GDP ratio, from 55% in 2015 to 45% in 2020.

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The Constitutional Amendment of the Public Expenditure Cap went through a long and complex legislative process. The amendment was initially processed as PEC 241 in the Chamber of Deputies and as PEC 55 in the Federal Senate.

On October 10, 2016, it was approved in the first round in the Chamber of Deputies with 366 votes in favor, 111 against, and two abstentions.

The amendment then moved to the Federal Senate, where it was approved in a first round on November 29, 2016, with 61 votes in favor and 14 against.

In the second round, the amendment was approved with 53 votes in favor and 16 against on December 13, 2016.

The amendment was promulgated on December 15, 2016, and became Constitutional Amendment No. 95.

Here are the key legislative milestones:

The public reaction to the Constitutional Amendment of the Public Expenditure Cap has been quite intense.

The Expenditure Cap Amendment has divided opinions and generated controversy among experts and activists linked to social movements.

Many people are passionate about the issue, and it's not uncommon to see heated debates on social media and in public forums.

Experts and activists from various social movements have taken sides on the amendment, with some strongly supporting it and others vehemently opposing it.

In December 2021, the National Congress enacted Constitutional Amendment No. 113, which changed the rule for updating the spending cap.

This amendment adjusted the ceiling for inflation from January to December, opening up a space of 65 billion for the 2022 budget.

The text of the amendment came from the "PEC of Precatórios", which aimed to institute a new regime for the payment of precatórios, or court-ordered government debt.

However, the parts of the amendment referring to judicial debts were questioned and returned to the Chamber of Deputies for further analysis.