Brazil’s Congress approved a pivotal fiscal package put forth by President Luiz Inácio Lula da Silva’s administration on Friday to help ensure the country’s stability and enforce sound economic practices. The Senate approved the third and final bill in the three-part package Friday with a 42-31 vote, after already being voted on by the lower house. The budget measures limit the growth rate of the minimum wage, among other provisions, while raising the threshold for pensions and social assistance for old and disabled people.
The government had been under pressure to pass the package before Congress’ holiday break next week, and concerns about potential delays had been affecting local markets in recent days. Among the key provisions are restrictions on granting tax benefits if public accounts face a primary deficit, as well as stricter controls on how lawmakers allocate public funds. New eligibility rules have also been introduced for an annual “wage bonus” granted to low-income workers.
Lower House Speaker Arthur Lira said the package would secure fiscal responsibility and improve the outlook on the country’s economy in 2025. “We voted to make sure the fiscal framework is respected,” he said, though he conceded that these measures were “not definitive.”
The fiscal package is part of an overall effort to strengthen the fiscal framework passed last year, aiming at reducing Brazil’s growing public debt. However, some of the provisions were altered by Congress, which raises doubts about the fiscal impact-the reduction may be less marked than expected. Despite such changes, Finance Minister Fernando Haddad played them down, saying that only a modest amount would have to be shaved off final savings.
The package is viewed to boost the confidence of investors and ensures that the country has long-term economic stability.
