Senate, House will discuss how to untie government’s debt knot

Senate, House budget debt
In front of the crowd, from the left: President Bolsonaro,Senate President Rodrigo Pacheco, Speaker Arthur Lira, and Communications Minister Fábio Faria. Photo: Edilson Rodrigues/SF/CC-BY 4.0

House Speaker Arthur Lira and Senate President Rodrigo Pacheco will meet this evening to discuss solutions to ease the pressure on the federal budget. The government owes BRL 89 billion (USD 16.62 billion) in registered warrants — the so-called precatórios — for next year, but wants to spread payments over several months to free up cash for social programs.

Economists call the government-sponsored solution a “de facto default.”

The National Council of Justice (CNJ) proposes instead to cap precatório repayments at BRL 39 billion. Another alternative would be to remove said expenses from the government’s spending cap — a move that would rattle investors and cast doubt about the Jair Bolsonaro administration’s commitment to fiscal solvency.