The Brazilian government has requested the Supreme Court to declare unconstitutional a Constitutional Amendment that altered the payment rules for court orders. This change, previously known as the “PEC dos Precatórios,” permitted the federal government to restrict payments for court-ordered debts to comply with the current fiscal rule, known as the spending ceiling. This rule stipulated that public expenditures for a given year could not exceed the inflation rate accumulated in the previous year.
The National Congress passed this rule through Constitutional Amendments No. 113/2021 and No. 114/2021, effectively extending the annual limit for court order payments until 2027. In practical terms, this extension could increase the financial obligations of the federal government in this regard. Experts argue that delaying these payments could be considered a form of “default” by the government, as these obligations have already been legally finalized and, therefore, cannot be reversed through legal means.
Brazilian Government Challenges Court-Ordered Debt LAW
The Brazilian Government’s request to the Supreme Court is based on the argument that the Constitutional Amendment violates the principle of separation of powers and the right to due process. The government argues that the National Congress does not have the power to alter the payment rules for court orders, as this is a judicial prerogative. The government also argues that delaying these payments violates the right of creditors to receive the full amount of their debts.
The Supreme Court is expected to rule on the Brazilian government’s request in the coming months. If the Court strikes down the Constitutional Amendment, it would be a major victory for creditors and a setback for the Brazilian government’s fiscal plans.
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