Brazil's Agenda: reforms to come.
An interesting set of legislative reforms to help increasing gross domestic product (GDP).
Brazil's Agenda: reforms to come. An interesting set of legislative reforms to help increasing gross domestic product (GDP).
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Brazil’s Agenda” is about several bills in twenty-eight themes along three axes: improvement of infrastructure and business environment (1), fiscal equilibrium (2) and social protection (3). Only a few of these 28 themes have been highlighted below.
In Brazil, the National Assembly (“The National Congress”) is a bicameral legislature. It consists of a Senate (81 members) and a 513-member House of Representatives. The body has been modelled by Brazilian Federal Constitution after the federal Congress of the United States and is supposed to guarantee equal representation of the states in the Senate (irrespective of size differences) and proportional representation of population in the House of Representatives.
A month ago, the President of the Federal Senate, Mr. Renan Calheiros (PMDB) presented to four Ministers of Brazil’s Federal Administration a package containing a quite interesting set of legislative reforms to help increasing gross domestic product (GDP). The bill package was named “Brazil’s Agenda” (“Agenda Brasil”).
“Brazil’s Agenda” has been initially successful at Senate as it has been seen as an independent Legislative Agenda.
Last August 8th the Senate Special Committee on National Development approved its own work plan and in this same week Senators approved two constitutional reform bills at Senate Floor. One of them is the constitutional reform bill number 84/2015 (PEC 84/2015), which has already even been sent to the House of Representatives and is intended to forbid the Federal Government to create any public policies that bring additional expenditures to state and local governments without financial support provided by specific transfer programs. This will probably help state and local governments’ fiscal policies to reach a sustainable path while completing the economic recovery. It is necessary to notice that a three-fifths majority is required to pass a Constitutional Reform Bill in each of the Houses of the National Assembly.
“Brazil’s Agenda” is about several bills in twenty-eight themes along three axes: improvement of infrastructure and business environment (1), fiscal equilibrium (2) and social protection (3). Only a few of these 28 themes have been highlighted below.
I.1. JURIDICAL CONFIDENCE (SEGURANÇA JURÍDICA):
The President of the Republic will not be able to issue Provisional Executive Orders that can compromise the economic equilibrium of the contracts, especially on government contracts.
So, the Constitutional Reform (PEC 111/2015) will give juridical confidence to every party involved in government contracts in the country against abrupt changes in regulations, because a bill debated in congress will be necessary for such purposes.
I.2. INFRASTRUCTURE (INFRAESTRUTURA):
Senate Bill number 444/2013 (PLS nº 444, de 2013) intends to cause important changes in future concession-type arrangements. Here are just three examples of changes expected to happen in legislative field for future concession contracts:
1) it will be possible to use concession-type arrangements for public constructions themselves;
a.1) this means that the economic operator will be able to make the profitable utilization of the asset, without any related public services to be operated as a concession;
a.2) also, the economic operator will receive the tax revenues for valorization of real estate assets in the neighborhood;
a.3 ) public constructions could be practically anything related to public utility or social interest, such as urbanization of slums, construction of new buildings, enlargement of existing buildings and so on;
2) as a form of alternative dispute resolution (ADR) outside the courts, arbitration is already acceptable for concession contracts in Brazil;
b.1) the difference is that arbitration will also become, in the major context of concession agreements, a common form of dispute resolution between the economic operator and the property owners, after the Declaration of Public Utility for expropriation;
b.2) arbitration will be mandatory for the economic operator, but optional for the property owners (or they can wait for direct expropriation); that means that the economic operator of concession will be obliged to offer the arbitration option to property owners;
b.3) arbitration will happen for the purpose of determining compensation for expropriation, according to parameters established in the concession contract;
3) the Specific Purpose Society will have to be an open capital company or a real estate fund (a little bit similar to REIT, but in accordance with Brazilian Law).
I.3. MINING (MINERAÇÃO):
Constitutional Reform Bill number 53/2014 (PEC 53/2014) intends to allow private mining of nuclear minerals, under concession. This might include research, mining and trade of nuclear minerals, notably uranium.
I.4. ENVIRONMENTAL PERMITTING (LICENCIAMENTO AMBIENTAL):
A Constitutional Reform Bill (PEC 65/2012) will determine that after environmental permit has been issued, public constructions cannot be suspended unless the suspension relies on new facts.
This is a very polemic bill. No more details are available at this moment, but legislative debates are expected to happen soon.
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