Brazil deputies pass law allowing Bolsonaro to increase spending in election year

RIO DE JANEIRO, BRAZIL – The amendment, which will now have to be debated by the Senate also in two votes, authorizes the government to delay the payment of court-ordered debt and to use the available resources to finance the “Auxilio Brasil” (Bazil Aid) program, which foresees the distribution of subsidies to some 17 million low-income families.

The passed measure also enables the Executive to exceed the cap on public spending set by law next year, which limits raising the amount of public resources disbursed to the inflation rate of the previous year.

The progress of the amendment in Congress had been causing instability in the financial market, with the São Paulo stock exchange dropping and the dollar rising, due to investors’ concerns that the government would increase public spending, 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 Ministry of Economy Secretaries.

The approval of the amendment is considered crucial for Bolsonaro’s government, as the far-right leader will try to win a new mandate in the October 2022 presidential elections, despite his high rates of unpopularity.

With the payment of court-ordered debts deferred for the coming years, the government will have at its disposal approximately R$90 billion (US$16.364 billion) from the 2022 budget to finance the Auxilio Brasil program, foreseeing the distribution of a monthly aid of R$400 to the poorest families.

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

The pro-government parties secured 15 votes more than the minimum required (308 votes or 3/5 of the 513 deputies) for the approval of amendments to the Constitution in the Lower House.

In the first vote, last week, the text had been passed with 312 votes in favor.

The government managed to raise support for its project despite the strong controversy caused by the measure, the market’s negative reaction and the campaign of left-wing parties to boycott the bill advocated by Bolsonaro’s Executive.

Attacks on the amendment intensified after the press disclosed that the government had authorized the release of about R$1.4 billion from the budget in projects supported by the parliamentarians who backed the measure to benefit their electoral bases.

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