Opinion

Brazil’s spending cap is finished. Where to tie up Ulysses now?

The Bolsonaro administration decided to poke holes in Brazil's five-year-old federal spending cap. Where to go from here?

spending cap guedes
Demonstration outside of the Economy Ministry. Photo: Mateus Bonomi/Agif/Folhapress

Instituted in 2016 as a new and powerful anchor for the country’s fiscal accounts following years of largesse, Brazil’s federal spending cap is dead. And, ironically, it was dismantled on the watch of an orthodox, pro-market, right-wing Economy minister, who has failed in his attempts to convince elites that it would be possible to grant a “waiver” to boost social spending without jeopardizing the current legal framework.

Meanwhile, the government’s congressional coalition is preparing a constitutional amendment bill which, in practice, frees up around BRL 80 billion (USD 14 billion, or just under 1 percent of Brazil’s GDP)...

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