Constitutional Amendment of the Public Expenditure Cap

Constitutional Amendment no. 95
National Congress of Brazil
CitationPEC 241/2016
Territorial extentWhole of Brazil
Passed byChamber of Deputies
Passed25 October 2016
Passed byFederal Senate
Passed13 December 2016
Signed bySenate President Renan Calheiros
Chamber President Rodrigo Maia
Signed15 December 2016
Effective15 December 2016
Legislative history
First chamber: Chamber of Deputies
Bill titleConstitutional Amendment Bill no. 241 of 2016
Bill citationPEC 241/2016
Introduced byExecutive Branch
Introduced15 June 2016
First reading15 June 2016
Second reading6 October 2016
Voting summary
  • 23 voted for
  • 7 voted against
Third reading25 October 2016
Voting summary
  • 359 voted for
  • 116 voted against
  • 2 abstained
  • 35 absent
  • 1 present not voting
Second chamber: Federal Senate
Bill titleConstitutional Amendment Bill no. 55 of 2016
Bill citationPEC 55/2016
Received from the Chamber of Deputies26 October 2016
First reading26 October 2016
Second reading9 November 2016
Voting summary
  • 61 voted for
  • 14 voted against
  • 5 absent
  • 1 present not voting
Third reading13 December 2016
Voting summary
  • 53 voted for
  • 16 voted against
  • 11 absent
  • 1 present not voting
Status: In force

Constitutional Amendment (Emenda Constitucional - EC) No. 95, also known as the Constitutional Amendment of the Public Expenditure Cap, changed the Brazilian Constitution of 1988 to institute the New Fiscal Regime or New Fiscal Framework[1] with failures.[2][3][4] It imposed a limit on the growth of the Brazilian government's expenses for 20 years, extending to all three branches of the government, in addition to the Public Prosecutor's Office and the Public Defender's Office. During the legislative process, the Constitutional Amendment Bill (Proposta de Emenda à Constituição - PEC) received several names: "PEC of Expenditure Cap", "PEC 241" in the Chamber of Deputies and "PEC 55" in the Federal Senate. Its opponents coined the epithet "PEC of Death".[5]

Public spending and investments were limited to the same amounts spent in the previous year, adjusted for inflation[6][7] measured by the national Consumer Price Index (Índice Nacional de Preços ao Consumidor Amplo - IPCA). This was a proposed amendment to the Transitional Constitutional Provisions Act (Ato das Disposições Constitucionais Transitórias - ADCT), with validity set for the next 20 years, and from the tenth year on the President of the Republic may change this correction of public spending through a Supplementary Law. In the year 2017, there were no changes in the areas of Health and Education.[8] Both areas had a mandatory minimum spending limit corresponding to a percentage of the Union's Net Current Revenue (Receita Corrente Líquida - RCL) determined by the Federal Constitution. From 2018, the floors began to be adjusted by the value of the previous year adjusted by the IPCA between July of the previous year and June of the current year.[9][10][11] Critics of the measure claimed that the constitutional floors would fall over time if the revenue starts to grow more than inflation in the coming years.[12]

  1. ^ "Instituto de Economia - Unicamp - Quatro tetos e um funeral: o novo arcabouço/regra fiscal e o projeto social-liberal do ministro Haddad". www.eco.unicamp.br. Retrieved 2023-06-13.
  2. ^ Fiscal Rules at a Glance - Background Paper P.15.
  3. ^ "Novo Regime Fiscal". Ministério da Fazenda (in Portuguese). Archived from the original on October 10, 2016. Retrieved April 13, 2023.
  4. ^ "Teto dos gastos públicos cria condições para o Brasil crescer". Ministério da Fazenda (in Portuguese). June 15, 2016. Archived from the original on November 15, 2017. Retrieved November 15, 2017.
  5. ^ Fabiana, Reinholz (October 3, 2018). "Emenda 95, o enfraquecimento do pacto social". Brasil de Fato (in Portuguese). Retrieved March 17, 2020.
  6. ^ "O que é o teto de gastos, que o governo planeja furar?". Uol Economia (in Portuguese). October 24, 2021. Retrieved October 24, 2021.
  7. ^ Boris, Herrmann (November 11, 2016). "Schüler an die Macht". Süddeutsche Zeitung (in German). Retrieved April 13, 2023.
  8. ^ "Teto de gastos: O gradual ajuste para o crescimento do país". Ministério da Fazenda (in Portuguese). December 2018. Archived from the original on December 30, 2019. Retrieved June 16, 2020.
  9. ^ "PEC 241: tire dúvidas sobre a proposta que limita gastos públicos". G1 (in Portuguese). October 11, 2016. Retrieved November 2, 2016.
  10. ^ Fernanda, Calgaro (October 4, 2016). "Relatório da PEC dos gastos eleva piso para a saúde em 2017". G1 (in Portuguese). Retrieved April 13, 2023.
  11. ^ "Promulgada Emenda Constitucional do Teto de Gastos Públicos". Senado Federal (in Portuguese). December 15, 2016. Retrieved January 13, 2022.
  12. ^ "PEC do teto protege gastos com saúde e educação, diz Tesouro". Exame (in Portuguese). October 27, 2016. Retrieved April 13, 2023.