Lula’s $28 Billion Spending Plan Leaves Investors Worried About Fiscal Credibility
- Bill that frees up money for social aid moves to lower house
- Economists say proposal still lacks fiscal credibility
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Luiz Inacio Lula da Silva’s efforts to boost public spending cleared a key first hurdle Wednesday as Brazil’s senate approved a bill that will free up money to pay for his campaign pledges, a proposal that has investors worried about the incoming government’s fiscal credibility.
The bill, dubbed PEC da Transição, was approved with 64 votes in favor, more than the 49 it needed to clear the upper house, in two separate rounds of voting. Lawmakers made no changes to the text agreed to earlier, which boosted the so-called spending cap, a rule that limits the growth of government expenditures, by 145 billion reais ($28 billion) for two years, making room for increased social aid that wasn’t fully budgeted by outgoing President Jair Bolsonaro.