Brazil’s Spending Cap Expected to Delay Until 2017: Speaker, According to Reuters

By Maria Carolina Marcello and Anthony Boadle

BRASILIA – A constitutional amendment proposed by interim President Michel Temer aimed at instituting a limit on Brazil’s public spending is expected to pass in the lower house this year, according to lower chamber Speaker Rodrigo Maia. However, its approval in the Senate won’t happen until 2017.

This proposed cap is a key element of Temer’s plan to address a significant fiscal deficit left behind by the Workers Party government of suspended President Dilma Rousseff. Despite the anticipated passage in the lower house, the actual impact on the fiscal situation will be delayed until it secures Senate approval next year.

"We must take advantage of the fiscal crisis the Workers Party left behind to demonstrate to Brazilians what fiscal responsibility entails," Maia stated. He noted that the amendment is slated for a first vote in the House in the second half of October, but the legislative year will be brief due to local elections also taking place in October.

Maia also indicated that he would ensure the swift passage of another critical piece of legislation in Temer’s efforts to navigate Brazil out of its most severe recession since the 1930s. This legislation would allow for a greater involvement of private companies in the development of extensive offshore oil reserves.

The Senate has already approved the bill, which would remove the requirement for the state-led oil company Petrobras to manage all new projects and cover 30 percent of the costs associated with subsalt developments—an obligation that is currently unsustainable for the financially strained company.

Following the resignation of Eduardo Cunha due to corruption allegations, Maia has committed to accelerating Temer’s economic recovery agenda, which includes a bill to renegotiate the debts of Brazil’s states with the federal government. This measure is expected to be voted on next Wednesday.

As a supporter of Temer, Maia’s principal challenge is to determine the timing for a vote regarding whether to remove Cunha from his position, an outcome he anticipates will occur within days. Critics of Cunha insist that he should be barred from politics as soon as next week. However, Temer’s government is hoping for a delay in this vote, as its outcome could jeopardize Temer’s own confirmation by the Senate, which is expected to make a definitive ruling on Rousseff’s impeachment this month.

Maia expressed confidence in Rousseff’s impending conviction by the Senate for violating budgetary regulations intended to increase public spending, asserting that her return to power is highly unlikely. "An overwhelming majority of Brazilians don’t want her back," he remarked.