President of the Republic and the Minister of Economy discuss government measures on the price of Petrobras fuel

With the intensification of the conflict between Russia and Ukraine, international oil prices soar and worry world leaders. With the Government of Brazil it was no different: Jair Bolsonaro is discussing with Congress the possibility of freezing the price of Petrobras fuel.

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As analyzed by Estadão and disclosed by the website Broadcast, the cost of not following the rise in fuel prices in the foreign market would be borne by Petrobras. The government argues that, as Petrobras' costs are in reais and it posted record profits last year, it is in a position to handle the price adjustment in this unstable period.

According to sources related to the discussions, Paulo Guedes, Minister of Economy, will not be opposed to the freezing of prices for a while, however, he defended the focus on the approval of the complementary bill (PLP) 11. This bill determines the collection of ICMS per liter of fuels and establishes the taxation model in only one commercialization stage.

In this way, Guedes held a meeting with Bolsonaro and opposed measures that include subsidy, creation of a stabilization fund with resources from the National Treasury and measures that increase government spending. The question raised by the minister is that governors have R$ 150 billion more in revenue, so they can reduce the ICMS.

According to a government source, “in times of war, it is better to keep the price at a standstill”, considering the preference for keeping fuel prices stable over a 20% readjustment to keep up with the international market. For this, there must be approval by the Board of Petrobras. The decision puts pressure on the president of Petrobras, Joaquim Silva e Luna, whose mandate ends in March.

The freezing project has also already been discussed with the rapporteur for projects that take care of fuels in the Senate, Jean Paul Prates (PT-RN), who expects changes in Petrobras' pricing policy.

Decree of state of calamity

If the conflict in Eastern Europe continues for a long time, the Government does not eliminate the possibility of having to declare a state of calamity. In this case, the government is authorized to implement actions that mitigate the impacts of the war on the economy, such as, for example, increasing spending and suspending fiscal rules. In the pandemic, the government increased spending on programs to support employment and aid to the most needy, which exceed the spending ceiling limit.

In addition to escalating fuel prices, which affect inflation and harm consumers, there is also concern about how sanctions on Russia could impact Brazil. This and other consequences of the conflict could in fact be analyzed in a period of three months, considering that everything is still very unstable.

tax collection

The government's proposal for exemption from PIS/Cofins can help with a 50 cents discount on the price of a liter of fuel left over to Brazilians. According to the government's estimate, the cost of this measure will be R$ 18 billion.

The proposal is supported by the Minister of Economy, who proposed to the governors that they encourage the reduction of ICMS by the same amount of R$ 18 billion, thus avoiding an unwanted rise in fuel prices in the domestic market. In case of approval of the two measures, the estimated drop in the price of diesel is R$ 0,70. The governors, in turn, are against the loss of ICMS collection.

For Senator Prates, the legislative projects should not take too long. Analyzing the sudden attitudes of the government, caused by the rise of the barrel of oil, he believes that the issues will be resolved in a week, very quickly, in the Chamber.