BRASILIA (Reuters) – Brazil will edit regulations to fulfill budget commitments made to Congress to clear the way for a vote on a package of measures to curb spending, Deputy Finance Minister Dario Durigan said on Tuesday.
Durigan told reporters an opinion from the Solicitor General’s Office and certain actions would “operationalize” an agreement with Congress to release public funds allocated directly by lawmakers in budget amendments.
Such amendments, made without executive branch oversight, have surged in recent years, consuming an increasing share of the budget.
The Supreme Court upheld transparency mechanisms for their implementation on Monday, effectively freezing these resources and upsetting Congress, which threatened not to vote on the government’s fiscal package unless this was resolved.
According to Durigan, the government’s actions would help unlock these funds.
He also noted that minor adjustments might be made to the fiscal package in a benefit for the elderly and disabled, the so-called BPC, whose access rules were tightened in the proposal. However, he stressed there would be no fiscal loss.
The government estimates that the package will save over 70 billion reais ($11.5 billion) in the next two years, deeming it essential to support the country’s fiscal framework. That is a key reason for its push to have it approved this year.
The package was met with skepticism in financial markets, with many experts pointing to overly optimistic government projections and disappointment over the inclusion of an income tax reform to increase exemptions for the middle class.
Durigan said the proposed tax exemption expansion would be fully offset by other measures, as President Luiz Inacio Lula da Silva’s administration cannot forgo revenues.
He noted that the income tax reform is ready and expected it to be sent to Congress this year, but stressed that the final decision rests with Finance Minister Fernando Haddad.
($1 = 6.0639 reais)
(Reporting by Marcela Ayres in Brasilia; Editing by Richard Chang)
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