The Brazilian Chamber of Deputies early Tuesday gave its first-round approval to a constitutional amendment limiting the rise in each year’s government spending to previous-year inflation. As a constitutional amendment, the proposal must now be approved again by the Chamber in a second round vote before being sent to the Senate for two rounds of voting.
Administration officials said they are confident the amendment will be approved by the end of this year so that it will apply to the 2017 budget. The main changes are:
- During the next 20 years, public expenditures may not rise above inflation rates. This limit will also apply to health and education public policies from 2018.
- The President of Brazil may adjust the spending limits in 10 years.
- Government agencies that infringe the limit will be prevented from hiring staff and increasing wages.
- The amendment caps spending at all branches of the federal government.
The approval was a victory for the administration of President Michel Temer, who has pledged a policy of fiscal austerity in the face of rising government deficits. Brazil’s debt-to-GDP ratio recently passed the 70 percent mark, considered worrisome by international credit rating agencies. Yesterday, the Chamber voted 366 to 111 in favor of the amendment, or some 58 votes more than the three-fifths majority needed for passage. The second round in the Chamber is scheduled for October 25.
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