Brazil's Lower House of Congress Approves Cap on Public Spending

10/26/2016 - 12h43

The Lower House approved in the second vote on Tuesday (25) the base text of the so called "Ceiling PEC", a bill that freezes the federal government spending for 20 years.

The measure is Michel Temer's government priority in the Congress during 2016. With 359 votes in favor, 116 against and 2 abstentions, the score frustrated the government's plans to expand the majority reached in the first vote, on October, 10th, when 366 congressmen voted for the bill and 111 against it.

After the amendments to the text are analyzed, the bill will go to the Senate, where it must also be approved in two votes.

Temer was directly involved in the articulation for the approval of the measure, hosting a dinner for more than 200 congressmen at the Alvorada Palace before the first vote and taking part of a second dinner at the home of the Lower House speaker, Rodrigo Maia (DEM-RJ), this Monday (24).

The president also dismissed ministers during the two votes so that they could temporarily retake their positions in the Congress and increase the score in favor of the proposal.

The opposition, as well as dissidents of Temer's base, argue that the new fiscal system will cut investments, mainly in education and health.

The government supporters highlighted the view that the measure is necessary to avoid the bankruptcy of the state and restore confidence in the management of the economy.

This year, the government expects to close its accounts with a shortfall of up to R$ 170.5 billion (US$ 54.64 billion).

The proposal restricts government spending to the IPCA (Extended National Consumer Price Index, Brazil's official inflation index) of the previous 12 months, and lasts 20 years, with the possibility of changing the way to limit spending from the tenth year.

Translated by MARINA DELLA VALLE

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