Brazil Congress Resumes Voting on Bill that Eases Fiscal Law - Bloomberg
Brazil’s lower house is under pressure to conclude voting on a controversial proposal that bends the country’s fiscal rules to finance a new social program President Jair Bolsonaro intends to launch ahead of his 2022 re-election campaign.
House Speaker Arthur Lira, an ally of the president, is expected to put the matter to a second round of voting on Tuesday after amendments to the main text of the bill are analyzed by lawmakers. In an initial vote last week, the proposal was approved by a very tight margin.
Since then, opposition parties have been working hard to convince lawmakers who backed the so-called precatorios bill to change their mind, while an unexpected ruling by the nation’s top court weakened Lira’s bargaining power in the lower house.
Bolsonaro is running against the clock to approve the constitutional amendment in both houses of congress by the second week of November. Otherwise, he may not be able to launch still this year his flagship Auxilio Brasil program, which promises payments of 400 reais ($72) per month to about 17 million poor families.
Investors are closely watching the vote as they worry about Brazil’s deteriorating fiscal outlook. While the proposal to ease fiscal austerity initially triggered a severe market sell-off, they now fear the alternative would be worse: Financing the program through additional Covid cash handouts that wouldn’t be subject to the so-called spending cap, a rule that limits the growth of public expenditures to the previous year’s inflation rate.
Top Court Ruling
Complicating Lira’s efforts to quickly approve the bill is an injunction issued by Supreme Court Justice Rosa Weber, who last week suspended transfers of federal funds to works sponsored by lawmakers in their home states, alleging the mechanism lacked transparency.
Control over the distribution of such funds, which amounted to 1 billion reais in the days before the bill’s first-round vote, gave the house speaker great bargaining power when negotiating the support of fellow lawmakers.
Weber’s decision needs to be ratified by the majority of the court in an ongoing plenary vote. So far, five out of the country’s 10 justices have sided with her.
| What are precatorios and how can they make room for a new social program? |
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(Updates with a majority of top court justices backing decision that reduces the bargaining power of lower house speaker in third paragraph.)
source: https://www.bloomberg.com/news/articles/2021-11-09/brazil-congress-to-resume-voting-on-bill-that-eases-fiscal-rule
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