The Brazilian Senate voted 64 to 13 on Thursday to pass a constitutional amendment bill allowing the federal government to cap court-ordered debt repayments scheduled for 2022. That will free up much-needed budget space to pay for new welfare programs, on which President Jair Bolsonaro is essentially bankrolling his re-election chances.
As with all amendments to the Constitution, the bill must get a 60-percent majority in two rounds of votes in each congressional chamber. The House already approved it, but as senators made substantial changes to the core draft, they will have to give their final approval. The biggest change made in the Senate forbade court-ordered repayments related to education to be cut by the new cap.
Moreover, the government accepted that the payment of government IOU bonds will be valid until 2026, and not the previously suggested deadline of 2036. Unpaid IOU bonds could amount to BRL 1.8 trillion (USD 328 billion) by 2036, when the federal spending cap will expire.