Brazil deputies approve law allowing Bolsonaro to raise spending in election year 2022

RIO DE JANEIRO, BRAZIL – In a second and final vote, Brazil’s Chamber of Deputies approved an amendment to the Constitution that allows the Government of President Jair Bolsonaro to increase public spending to finance a subsidy program for the poorest in 2022 when he seeks reelection.

The amendment, which will now have to be debated by the Senate also in two votes, authorizes the Government to delay the payment of compensation ordered by the courts and to use the resources that remain available to finance the Auxilio Brasil program, which provides for the distribution of subsidies to about 17 million low-income families.

The approved measure also enables the Executive to exceed the ceiling on public expenditures set by law next year, which limits the increase in the disbursement of public resources to the previous year’s inflation rate.

The advance of the amendment in Congress had been generating instability in the financial market, with a fall in the Sao Paulo stock exchange and a rise in the dollar, due to investors’ fear that the Government will increase public expenditures, abandon its fiscal austerity policy and further aggravate the already high deficit in the public accounts.

The Government’s decision to relax the fiscal adjustment also led to the resignation of four important secretaries of the Ministry of Economy.

The approval of the amendment is considered important for Bolsonaro’s Government since the conservative leader will try to conquer a new mandate in the presidential elections of October 2022, despite his high unpopularity indexes.

With the postponement of the payment of indemnities imposed by Justice for the coming years, the Government will have available about 90 billion reais (US$16.364 billion) from the 2022 budget to finance the Auxilio Brasil program, which provides for the distribution of a monthly aid of 400 reais (US$72.7) to the poorest families.

The basic text of the amendment was approved on Tuesday night by the plenary of the Chamber of Deputies after a long debate by 323 votes in favor and 172 against.

The pro-government parties obtained 15 votes more than the minimum necessary (308 votes or three-fifths of the 513 deputies) required to approve amendments to the Constitution in the Lower House.

In the first vote last week, the text had been approved by 312 votes in favor.

The Government managed to raise support for its project despite the intense controversy generated by the measure, the adverse reaction of the market, and the campaign of left-wing parties to boycott the project defended by Bolsonaro’s Executive.

Attacks on the amendment intensified after the press revealed that the Government had authorized the release of about R$1.4 billion (US$254.5 million) from the budget in projects supported by the parliamentarians who backed the measure to benefit their electoral bases.