Brazil government suggests ceiling for public spending

Acting President Michel Temer's administration put forward a constitutional amendment bill limiting the rise in public spending according to the inflation. The legislation, presented to lawmakers in Temer's coalition on Wednesday (Jun. 15), stipulates a ceiling on expenditures to remain in effect for 20 years starting in 2017, with adjustments possible ten months after its introduction. Total public expenditures would be set according to the official inflation rate from the previous year. The proposal is to be submitted to Congress by the government, which may make changes to the text.

According to the Finance Ministry, starting in 2017, total primary costs should undergo no real growth. “The [amendment bill] will limit, for the first time, the growth in public spending and will contribute to the structural adjustment necessary in the public accounts,” the text reads. The proposal dictates that, in its first year, the limit in expenses should be equal to the expenditures from the previous year adjusted for the inflation of that same year.

The ministry further declared that the minimum values for spending in health care and education will be adjusted for the inflation from the previous year. The government, however, made clear that it is the prerogative of Congress to decide where government funds should go, in observance of this new constitutional floor, in case the bill is approved.

Translated by Fabrício Ferreira