Brazil Aims to Approve Limit on Federal Spending

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Last minute talks and negotiations were made this weekend in Brazil’s capital, Brasilia, as the government of President Michel Temer tries to guarantee that the Chamber of Deputies will vote on a Constitutional Amendment which would impose a ceiling on public federal spending.

“We expect a significant quorum and we will pass the project,” Government Secretary, Geddel Vieira Lima, responsible for Congressional affairs told journalists on Sunday, October 9th, after a dinner for Congressional Representatives hosted by President Temer. “I think we have more than 350 votes,” he added.

The amendment calls for federal spending to be limited to a ceiling of the previous year’s budget, adjusted by the inflation measured by the Consumer Price Index (IPCA). The amendment would impose the ceiling on federal spending for the next twenty years.

According to the Administration, the Constitutional Amendment project is the first step to overcoming Brazil’s economic crisis. The Minister of Finance, Henrique Meirelles, has said that without this fiscal adjustment the Brazilian economy will not be able to move forward and recover.

“The Brazilian government spends too much and spends (money) badly. The state will have to seek efficiency,” Director of Budget and Financial Overseeing for the Chamber Chamber, Ricardo Volpe told Agencia Brasil.

Volpe, who helped prepare the project believes that a fiscal adjustment in the current economic system is inevitable, but the way this adjustment is conducted is up to Congress. “It will be via inflation, or an abrupt adjustment cutting various costs immediately or via a gradual adjustment, which is this amendment,” he says.