Brazil’s lower house of congress on Tuesday approved its version of the government’s new fiscal framework proposal, President Luiz Inacio Lula da Silva’s main legislative priority.
(Bloomberg) — Brazil’s lower house of congress on Tuesday approved its version of the government’s new fiscal framework proposal, President Luiz Inacio Lula da Silva’s main legislative priority.
The main text of the proposal, designed to replace the so-called spending cap rule while seeking to shore up Brazil’s public finances, passed with 372 votes in favor and 108 votes against. Amendments that can change the main text are expected to go to a vote before the proposal moves on to the Senate, where it needs the support of 41 the chamber’s 81 lawmakers.
The vote is a critical step toward “greater economic security,” which will allow the government to “invest more, have growth and even contribute to a downward trajectory in today’s interest rate,” Alexandre Padilha, the institutional relations minister, told journalists before the vote.
The proposal originally presented by Finance Minister Fernando Haddad was sent to congress in April as part of government efforts to allay investor concerns about Brazil’s finances under Lula and to give the central bank room to lower interest rates, considered by the president as the main obstacle to growth.
The government would be forced to reduce spending if revenue comes in below its estimates, including delaying some payments, freezing the salary of public workers and halting new hire.
–With assistance from Simone Iglesias.
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