Brazil’s Spending Cap Bill Faces Rumbles of Internal Dissent

  • Growing concern among government allies over health spending
  • Bill to limit public spending key policy of Brazil government

The Brazilian government’s flagship policy to cap public spending to restore the nation’s battered finances faces increasing opposition from within the ruling coalition.

On Wednesday evening, Luiz Henrique Mandetta, a deputy of the Democratas party allied to President Michel Temer, expressed unease at the proposal to peg spending on health to the benchmark IPCA consumer price index, saying that it was not an adequate reflection of health-care costs. He said that at least 40 congressional deputies shared his concern.

"This needs to be improved by the economic team or it runs the serious risk that deputies historically linked to health-care issues will have the strength to stymie this process,” he said, suggesting that an exception could be made for health spending. "If we don’t, we will send a message that this adjustment is about the market, banks and investors."

On Tuesday the Temer administration presented to Congress its long-awaited plan to limit the growth in public spending to the previous year’s rate of inflation. The proposal is part of a planned series of government measures to reverse a widening budget deficit and restore investor confidence. To win over skeptical legislators, the government added provisions to ensure higher-than-anticipated levels of minimum health spending.

In response to Mandetta’s comments, the government’s leader in the house, deputy Andre Moura, said that the bill would result in a 9 billion-real ($2.8 billion) increase in spending on health in 2017. "We cannot do anymore than what is being done," he said.

Congress is expected to carry out its first vote on the constitutional amendment later this week. To become law it must win approval by a three-fifths majority in two votes in each house of Congress.

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