Brazil currently spends 36% of its federal budget on interest and repayments of its external and domestic debt, while social areas such as health receive less than 5%, and education less than 3%. This is also a reality in several countries of the South.
Therefore, the Parliamentary Inquiry Commission (CPI) of the Public Debt in Brazil represents a great achievement of social movements in Brazil and also Latin America. In early 2008, the Member of Parliament (MP) Ivan Valente (PSOL / SP) collected the signatures of 1/3 of the members of Congress in order to request the creation of the CPI. But this was not enough. The Commission still needed to be created by the House Speaker Arlindo Chinaglia. In November 2008, during the International Seminar on "Debt Audits in Latin America¨, representatives of the Ecuadorian Comprehensive Public Credit Audit Commission (CAIC) met with Chinaglia, to show the results of this process, and within weeks he created the CPI. Therefore, the official debt audit in Ecuador was of fundamental importance for the creation of the CPI in Brazil.
However, the party leaders still had to nominate their parliamentarians to be members of the CPI, which took 8 months. After the struggle of organizations and social movements, the CPI was finally installed in August 2009 and began operating, sending Information Petitions to official bodies and conducting public hearings with governmental officials and experts. Various documents and statistics, which were never before disclosed and that show various signs of illegitimacy and illegality of the public debt were obtained.
On the other hand, other information requested was not forwarded to the CPI, such as debt contracts, statistics and data on domestic debt creditors, which has significantly limited the work and proof that the debt does not have adequate control and transparency. This is another indication of the illegality of the debt and instigates the carrying out of the debt audit as drafted in the Federal Constitution.
With the drafting of the final report by the rapporteur parliamentarian, which must be voted by the other members of the Commission by April 27, the CPI is currently in its final stages. Representatives from different organizations and movements have been meeting with the parliamentarians to present and discuss the main investigations of the CPI, disseminated by MP Ivan Valente, demanding that they be included in the Report. These organizations gave the members of the CPI a summary of the investigations, a document that is available on www.diva-auditoriac idada.org. br along with periodic Bulletins on the CPI.
Since its inception, the CPI has shown positive results, inserting into the agenda of the House of Representatives the serious situation concerning the Brazilian debt, in addition to disseminating the issue in the media, including the mainstream press, helping to deconstruct the ideas disseminated by the government that the debt has already been paid and as such is no longer a problem. Several civil society groups have been mobilizing and attended the sessions of the CPI, contributing to the engagement of different sectors of society in discussions on the public debt.
In March 24, 2010, the Finance Oversight and Control Commission of the House of Representatives approved the Petition presented by MP Cleber Green (PRB/MA), establishing a permanent debt audit through the "Special Subcommittee to follow, deepen, analyze and audit the External and Domestic Public Debt¨.
The establishment of the permanent debt audit represents a large international precedent, and it is an important practical outcome of the CPI and of the meeting held on March 10 between the members of the Citizens Debt Audit and MP Cleber Mr Green, who is also a member of the CPI. The approved Petition states that the subcommittee should audit the public accounts to investigate the findings of the CPI of the Public Debt, contained in the document the Citizen’s Debt Audit distributed to parliamentarians, which involves serious illegitimacies and indications of illegalities.
Among these findings, in regards to the external debt, the following stand out: the illegality of "floating interest rates" that made this debt explode from the late 80’s; the lack of debt contracts; lack of transparency and legislative authority; the successive renegotiations of the same debt, based on clauses that violate national sovereignty; recurring transformation of external debt into domestic debt; and more recently, the advance payment - at the expense of issuing domestic debt - of the debt with the IMF, Paris Club, Brady bonds and other securities, including premiums. The inclusion of "collective action clauses" in the external debt from 2003, also violates national sovereignty.
In regards to the domestic debt, the CPI also found several indications of illegitimacy and illegality, such as openness to international financial flows, which came to Brazil in search of high interest rates; the amazing growth of the debt through the mechanism of "interest on interest¨, already outlawed by the Supreme Court; the setting of interest rates by the Central Bank after consultations with the financial market itself, which characterizes a conflict of interest; permission to issue unlimited securities from the Treasury for the Central Bank to borrow form the market (through "Open Market Operations") to buy dollars and accumulate reserves; the classification of the portion of monetary debt up-date as amortization; the allocation of resources of social sectors for debt payments, among others.
Therefore, the Debt CPI will contribute towards greater discussions on the public debt in Brazil, and to disseminate the diverse and serious illegitimacies that marked the process of the Brazilian debt. Investigations of the CPI, disseminated by social movements, even if not included in the Commission’s Official Final Report, will still be forwarded to the public prosecutor, for further investigation and legal actions which will be formulated to be forwarded to the Court of Justice in order to cancel the debt, pay the damages to public patrimony and determine responsibilities.
Finally, the struggle for the official debt audit drafted in the Constitution continues...