Power

Brazil’s newest austerity bill a “step in the right direction” but not a solution

The House is expected to pass a bill giving the government ways to implement austerity measures. But the measure is not enough

austerity Senate President Rodrigo Pacheco. Photo: Roque de Sá/AS/CN/CC-BY
Senate President Rodrigo Pacheco. Photo: Roque de Sá/AS/CN/CC-BY

With a dramatic increase in spending on benefit schemes and health equipment, the Covid-19 pandemic put paid to almost every austerity effort implemented by the Brazilian government in recent years. As a result, the administration’s level of commitment to balancing public accounts has become a measure of Brazil’s sovereign risk. And this week, the country will try to clean up its international image by approving a constitutional amendment known in Brasília as the “Emergency PEC.”

Initially one of Economy Minister Paulo Guedes’ main reform proposals, the Emergency PEC intends to build on Brazil’s spending cap rule by establishing clear...

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