Fiscal planning is essential to ensure fiscal policy responsibility and public services with quality and efficiency. It is through fiscal planning that government, in a transparent manner, presents current fiscal situation, establishes its goals and strategies, identifies risks to public finance and adopts best practices of assessment, monitoring and implementation of public policies.
In Brazil, the Constitution, and complementarily the Fiscal Responsibility Law (LRF), establishes three main planning instruments: (i) Multiyear Plan (PPA), (ii) Budget Guidelines Law (LDO) and (iii) Annual Budget Law (LOA).
PPA is the legal instrument of planning for a longer term, establishing priorities and directions for government's actions. PPA establishes – for a 4 year period and by region – government's guidelines, goals and objectives which will guide the use of public and private resources (when resulting from partnerships) for capital expenditure and others associated to it as well as those related to continuous programs.
LDO is the link between PPA and LOA, establishing which programs, among the ones included in PPA, will have priority in the next year's budget. LDO also is responsible for: setting fiscal goals for Federal Government; disciplining annual budget preparation and execution; determining changes in the legislation along with its budget adequacy; regulating on federal debt and on Federal Government's personnel and social expenses; establishing official financial agencies investment policies; regulating on inspections made by Legislative and on jobs or services with evidence of serious irregularities; and other general provisions.
LOA estimates revenues and establishes the amount federal government is authorized to expend during the year. LOA must be compatible with LDO and PPA, and can be amended by additional credits' bills. LOA consists of Fiscal and Social Security budget, as well as investment budget for companies in which the Government, directly or indirectly, holds the majority of shares with voting rights.