A drone view shows the National Congress and Planalto Palace at the Square of the Three Powers in Brasilia, Brazil June 18, 2024. REUTERS/Adriano Machado/File Photo
BRASILIA (Reuters) -Brazil shaped regulations to fulfill budget commitments made to Congress, the official gazette showed on Tuesday, as the government aims to clear the way for a vote on a package of measures to curb spending.
Still, it is unclear if the fiscal measures could be approved by Congress this year, with the speaker of the lower house saying the government does not have enough votes to pass them.
Deputy Finance Minister Dario Durigan said earlier on Tuesday that an opinion from the Solicitor General's Office and certain actions would "operationalize" an agreement with Congress to release public funds allocated directly by lawmakers in budget amendments.
Such amendments, made without executive branch oversight, have surged in recent years, consuming an increasing share of the budget.
The Supreme Court upheld transparency mechanisms for their implementation on Monday, effectively freezing these resources and upsetting Congress, which threatened not to vote on the government's fiscal package unless this was resolved.
A document published in Brazil's official gazette on Tuesday afternoon set the rules to unlock those funds.
Even so, lower house speaker Arthur Lira said that the three proposals under the fiscal package will not be approved easily, and called their subjects, which include imposing restrictions on some social benefits, polemic.
"The package could still be voted on this week," he told journalists. "But, again, these are topics of much discussion," he said.
The government estimates that the package will save over 70 billion reais ($11.5 billion) in the next two years, deeming it essential to support the country's fiscal framework. That is a key reason for its push to have it approved this year.
The package was met with skepticism in financial markets, with many experts pointing to overly optimistic government projections and disappointment over the inclusion of an income tax reform to increase exemptions for the middle class.
Durigan noted that minor adjustments might be made to the fiscal package to benefit the elderly and disabled, the so-called BPC, whose access rules were tightened in the proposal. However, he stressed there would be no fiscal loss.
He noted that the income tax reform is ready and expected it to be sent to Congress this year, but stressed that the final decision rests with Finance Minister Fernando Haddad.
($1 = 6.0639 reais)
(Reporting by Marcela Ayres, Victor Borges and Lisandra Paraguassu in Brasilia; additional reporting by Andre Romani; Editing by Richard Chang and Stephen Coates)
