Brazil's Supreme Court flags unconstitutional spending approvals

Supreme Court Justice Gilmar Mendes warned that legislative approval of new spending can be declared unconstitutional if it lacks prior fiscal impact studies. He stressed that any law creating expenditures or revenue waivers must include an estimate of its budgetary and financial effects, otherwise it may be annulled. Mendes noted the Senate's recent measure to use the Pre‑Salt Fund for agribusiness debt, which could affect government finances by up to R$140 billion.

Separately, Justice Dias Toffoli voted that an amendment in Paraíba that would automatically adjust public‑sector budgets by inflation or revenue growth is unconstitutional. He argued that budget‑setting authority belongs to the executive and that automatic linkage would violate the separation of powers. The case will be reviewed by the full Court on 25 June.