By Nelson Belen, Contributing Reporter
RIO DE JANEIRO, BRAZIL – In a vote that began Monday (October 10th) morning and lasted into the early morning hours of Tuesday (October 11th), Brazil’s House of Representatives have agreed on the Proposed Amendment to the Constitution (PEC) 241/16, which sets a ceiling on public spending for twenty years. The final tally of votes was 366 in favor, 111 against, and two abstentions.
Monday’s vote was for the basic text of the proposed amendment, which will now be formalized in a second round of House voting, before being sent to the Senate for final approval.
In a statement following the vote, Brazil President Michel Temer said, “The rebalancing of the budget is not an end in itself but a means to return to growth, lower interest rates and increased employment. A balanced budget is the guarantee that there will be in the future the necessary resources for social policies to combat poverty, health and education.”
The PEC creates a ceiling on federal expenditures for the executive, judicial, and legislative branches of government, which will be adjusted according to the Broad National Consumer Price Index (IPCA) inflation rate.
According to the proposed text of the new amendment, federal entities who fail to comply with the spending limit will be penalized through various means such as being unable to hire staff, being forced to cut public projects, or even have to restructure the organization to fit within the budgetary constraints.
The proposal will also change the mechanism for determining minimum salary, which will no longer increase in relation to inflation if the increase would exceed the spending limit set by the government.
“The amendment approved today will, once in force, protect the Brazilian economy from fiscal irresponsibility,” said President Temer. “[The amendment] puts Brazil on the track to development with balance, based on a principle that everyone understands, which every family can follow in their own home, that one can only spend what he has.”