Brazilian Finance Minister Henrique Meirelles and Planning Minister Dyogo Oliveira, in coordinated statements, said Monday the administration has dropped plans to propose more flexible rules for issuance of public debt. Meirelles said, “This is not the time for such a discussion.” In recent weeks, administration officials floated the idea of a constitutional amendment that would scrap the so-called “golden rule” for debt management, enshrined in Brazil’s 1988 Constitution. Under the rule, the government can only issue new debt to cover infrastructure investments or rollover of existing debt. The rule prohibits the government from issuing debt in order to cover operating expenses. Investors responded negatively to the idea of scrapping the rule, which they said would undermine fiscal responsibility.
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