Brazilian interim president Michel Temer yesterday enjoyed his first victory in Congress when legislators approved his request to change this year’s budget target.
Lawmakers in a joint congressional session supported legislation that allows it to post a budget gap before interest payments of 170.5 billion reais (US$47.7 billion) this year, rather than a primary surplus as proposed by the previous administration. The upper and lower houses voted following a marathon session that ran well past midnight. The voting tally was not immediately made public.
Had lawmakers rejected the administration’s request, it would have been forced to drastically cut spending and shut down many government services to meet the original target of a primary surplus.
Yesterday’s win is an important signal that Temer can garner support for legislation in a Congress that until recently was stuck in gridlock amid a political crisis.
He now faces the challenge of sustaining that support as he asks lawmakers to pass unpopular fiscal-austerity measures that are designed to shrink the near-record budget deficit.
Temer, 75, took over Brazil’s top job less than two weeks ago on promises to unify a country that grew increasingly polarized during his predecessor Dilma Rousseff’s impeachment battle. While her supporters still denounce Temer as the architect of a coup against her government, his administration enjoys the support of many legislators who until a few months ago were loyal to Rousseff.
“Temer has averted conflict with parties that could become part of his allied base,” said Thiago Vidal, a political analyst at Brazilian consulting firm Prospectiva. “The result of today’s vote was widely expected.”
Temer is betting he can pick up additional political capital if he manages to put the recession-battered economy back on track.
To achieve that goal, Temer on Tuesday said he would ask Congress to limit subsidies and approve a cap on government spending.
He also suggested he could shut down Brazil’s sovereign wealth fund and improve corporate governance at public pension funds and state-run companies.
Structural reforms including a limit on government spending are more important than one-time budget cuts for putting Brazil’s fiscal accounts in order, Brazilian Minister of Finance Henrique Meirelles said on Tuesday.
The spending ceiling will be adjusted according to inflation from the previous year, with expenditure requirements for health and education subject to that limit, he added.
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