Public Finances

Section 1: General Rules

Article 163. A supplementary law shall make provisions for: (CA No. 40, 2002)

1. public finances;
2. foreign and domestic public debt, including the debt of the autonomous government agencies, foundations and other entities controlled by the Government;
3. granting of guarantees by government entities;
4. issuance and redemption of public debt bonds;
5. financial supervision of governmental entities and entities owned by the Federal Government;
6. foreign exchange transactions carried out by bodies and agencies of the Union, of the states, of the Federal District and of the municipalities
7. compatibility of the functions of the official credit institutions of the Union, safeguarding all the characteristics and full operational conditions of those intended for regional development.

Article 164. The competence of the Union to issue currency shall be exercised exclusively by the central bank.

Paragraph 1. It is forbidden for the central bank to grant, either directly or indirectly, loans to the National Treasury and to any body or agency which is not a financial institution.

Paragraph 2. The central bank may purchase and sell bonds issued by the National Treasury, for the purpose of regulating the money supply or the interest rate.

Paragraph 3. The cash assets of the Union shall be deposited at the central bank; those of the states, of the Federal District, of the municipalities and of the bodies or agencies of the Government and of the companies controlled by the same, at official financial institutions, excepting the cases established in law.

Section 2: Budgets

Article 165. Laws of the initiative of the Executive Power shall establish:

1. the pluriannual plan;
2. the budgetary directives;
3. the annual budgets.

Paragraph 1. The law which institutes the pluriannual plan shall establish, on a regional basis, the directives, objectives and targets of the federal public administration for the capital expenditures and other expenses resulting therefrom and for those regarding continuous programmes.

Paragraph 2. The law of budgetary directives shall comprise the targets and priorities of the federal public administration, including the capital expenditures for the subsequent fiscal year, shall guide the drawing up of the annual budget law, shall make provisions for alterations in tax legislation and shall establish the investment policy for the official development financing agencies.

Paragraph 3. The Executive Power shall, within thirty days after the closing of each two-month period, publish a summarized report on budget implementation.

Paragraph 4. The national, regional and sectorial plans and programmes set forth in this Constitution shall be drawn up in compliance with the pluriannual plan and shall be examined by the National Congress.

Paragraph 5. The annual budget law shall include:

1. the fiscal budget regarding the Powers of the Union, their funds, bodies and entities of the direct and indirect administration, including foundations instituted and maintained by the Government
2. the investment budget of companies in which the Union directly or indirectly holds the majority of the voting capital;
3. the social welfare budget, comprising all direct and indirect administration entities or bodies connected with social security, as well as funds and foundations instituted and maintained by the Government.

Paragraph 6. The budget bill shall be accompanied by a regionalized statement on the effect on revenues and expenses, deriving from exemptions, amnesties, remissions, subsidies and benefits of a financial, tributary and credit nature.

Paragraph 7. The functions of the budgets set forth in paragraph 5, I and II, of the present article, compatible with the pluriannual plan, shall include the function of reducing interregional inequalities, according to populational criteria. Paragraph 8. The annual budget law shall not contain any provision extraneous to a forecast of revenues and to the establishment of expenses, such prohibition not including authorization to open supplementary credits and to contract credit transactions, even if by advance of revenues, under the terms of the law.

Paragraph 9. A supplementary law shall:

1. make provisions for the fiscal year, effectiveness, terms, drawing up and organization of the pluriannual plan, of the law of budgetary directives and of the annual budget law;
2. establish rules for the financial and property management of the direct and indirect administration, as well as conditions for the institution and operation of funds.

Article 166. The bills regarding the pluriannual plan, the budgetary directives, the annual budget and the additional credits shall be examined by the two Houses of the National Congress, in accordance with their common regulations.

Paragraph 1. It is incumbent upon a permanent joint committee of Senators and Deputies to:

1. examine and issue its opinion on the bills referred to in the present article and on the accounts submitted annually by the President of the Republic
2. examine and issue its opinion on the national, regional and sectorial plans and programmes established in this Constitution, and exercise budgetary monitoring and supervision, without affecting the operation of the other committees of the National Congress and of its Houses, created in accordance with article 58.

Paragraph 2. Amendments shall be submitted to the joint committee, which shall report on them, and shall be examined, in accordance with the regulations, by the Plenary Session of the two Houses of the National Congress.

Paragraph 3. Amendments to the bill of the annual budget or to the bills which modify it may only be approved if:

1. they are compatible with the pluriannual plan and with the law of budgetary directives;
2. they specify the necessary funds, allowing only those resulting from the annulment of expenses, and excluding those which apply to: a) allocations for personnel and their charges; 122 b) debt servicing; c) constitutional tax transfers to the states, the municipalities and the Federal District; or
3. they are related:

• a) to the correction of errors or omissions; or
• b) to the provisions of the text of the bill of law.

Paragraph 4. Amendments to the bill of budgetary directives may not be approved if they are incompatible with the pluriannual plan.

Paragraph 5. The President of the Republic may send a message to the National Congress to propose modifications in the bills referred to in the present article as long as the joint committee has not started to vote on the part for which an alteration is being proposed.

Paragraph 6. The bills of the pluriannual plan law, of the law of budgetary directives and of the annual budget law shall be forwarded by the President of the Republic to the National Congress, under the terms of the supplementary law referred to in article 165, paragraph 9.

Paragraph 7. The other rules regarding legislative procedure shall apply to the bills mentioned in this article, as long as they are not contrary to the provisions of this section.

Paragraph 8. Any funds which, as a result of a veto, amendment or rejection of the bill of the annual budget law, have no corresponding expenses, may be allocated, as the case may be, by means of special or supplementary credits, with prior and specific legislative authorization.

Article 167. The following are forbidden:

1. to begin programmes or projects not included in the annual budget law;
2. to incur expenses or to assume direct obligations which exceed the budgetary or additional credits
3. to carry out credit transactions, which exceed the amount of capital expenses, excepting those authorized by means of supplementary or special credits with a specific purpose and approved by an absolute majority of the Legislative Power
4. to bind tax revenues to an agency, fund or expense, excepting the sharing of the proceeds from the collection of the taxes referred to in articles 158 and 159, the allocation of funds for public health actions and services, for the maintenance and development of education, and for the implementation of tax administration activities, as determined, respectively, in article 198, paragraph 2, article 212, and article 37, item XXII, and the granting of guarantees on credit transactions by advance of revenues, as established in article 165, paragraph 8, as well as in paragraph 4 of the present article
5. to open a supplementary or special credit without prior legislative authorization and without specification of the corresponding funds;
6. to reassign, reallocate or transfer funds from one programming category to another or from one agency to another without prior legislative authorization;
7. to grant or use unlimited credits;
8. to use, without specific legislative authorization, funds from the fiscal and social security budgets to supply a necessity or to cover a deficit of companies, foundations and funds, including those mentioned in article 165, paragraph 5
9. to institute funds of any nature without prior legislative authorization
10. to transfer funds voluntarily and to grant loans, including by means of advancement of revenues, by the Federal Government, the Government of the States and their financial institutions, for the payment of expenditures related to active and retired personnel and pensioners, of the States, the Federal District, and the Municipalities;
11. to use the funds arising from the welfare contributions set forth in article 195, I, a, and II, to defray expenses other than the payment of benefits of the general social security scheme referred to in article 201.

Paragraph 1. No investment whose execution exceeds one fiscal year may be implemented without prior inclusion in the pluriannual plan, or without a law to authorize such inclusion, subject to crime of malversation.

Paragraph 2. Special and extraordinary credits shall be effective in the fiscal year in which they are authorized, unless the authorization act is enacted during the last four months of that fiscal year, in which case, reopened within the limits of their balances, such credits shall be incorporated into the budget of the subsequent fiscal year.

Paragraph 3. The opening of extraordinary credit may only be allowed to meet unforeseeable and urgent expenses, such as those resulting from war, internal commotion or public calamity, observing the provisions in article 62.

Paragraph 4. It is permitted to bind proper revenues generated by the taxes referred to in articles 155 and 156, and the funds mentioned in articles 157, 158 and 159, I, a and b, and II, to the granting of a guarantee or a counterguarantee to the Union, and to the payment of debits owed to the same.

Article 168. Funds corresponding to budgetary allocations, including supplementary and special credits, intended for the bodies of the Legislative and Judicial Powers, the Public Prosecution, and the Public Legal Defense, shall be remitted to them on or before the twentieth of each month, in twelfths, as provided by the supplementary law referred to in article 165, paragraph 9. (CA No. 45, 2004)

Article 169. Expenditures on active and retired personnel of the Union, the states, the Federal District and the municipalities may not exceed the limits established in a supplementary law.

Paragraph 1. The granting of any advantage or increase of remuneration, the creation of posts, positions or functions, or alteration of career structures, as well as admission or hiring of personnel, on any account, by Government bodies and entities, or entities owned by the Government, including foundations instituted and maintained by the Government, may only be effected:

1. if there is a prior budgetary allocation sufficient to cover the estimated expenditure with personnel and the increases resulting therefrom;
2. if there is specific authorization in the law of budgetary directives, with the exception of government enterprises and joint stock companies.

Paragraph 2. Once finished the time limit established in the supplementary law referred to in this article for the adaptation to the standards therein stipulated, all remittances of federal or state funds shall be immediately suspended to the States, the Federal District, and the Municipalities which do not obey the said limits.

Paragraph 3. To comply with the limits established according to this article, within the time period stipulated in the supplementary law referred to in the head paragraph, the Union, the States, the Federal District, and the Municipalities shall adopt the following measures:

1. reduction of at least twenty percent of the expenditures on commission offices and positions of trust;
2. discharge of untenured servants.

Paragraph 4. If the measures adopted according to the preceding paragraph are not sufficient to guarantee compliance with the provision of the supplementary law referred to in this article, tenured servants may be dismissed, provided that a regulatory act justified by each of the Branches specifies the activity, the agency, or the administrative unit where reduction of personnel must be carried out.

Paragraph 5. A servant who is dismissed according to the preceding paragraph shall be entitled to compensation equivalent to one month of remuneration per year of service.

Paragraph 6. The post affected by the reduction mentioned in the preceding paragraphs shall be considered extinct, and the creation of a post, position, or function with equal or similar duties shall be forbidden for the period of four years.

Paragraph 7. A federal act shall provide for the general rules to be complied with in carrying out the provision of paragraph 4.