MercoPress. South Atlantic News Agency

IMF and IDB willing to help Brazil manage spending cap

Economists, scholars, and specialists will be summoned to give their opinion about this, Haddad said

Brazil's Economy Minister Fernando Haddad said Tuesday after a meeting with International Monetary Fund (IMF) Managing Director Kristalina Georgieva that the agency was willing to help South America's largest country handle its fiscal situation, Agencia Brasil reported.

According to Haddad, the IMF was willing to appoint a technical team to outline the rules in place today in different countries and the IMF's opinion “on those that are working and those that are not.”

Haddad also said that the Inter-American Development Bank (IDB) has also expressed its intention to contribute to the debate. “The IDB has also made itself available,” the minister said. “Many Brazilian economists, scholars, and specialists will be summoned to give their opinion about this,” he added.

The minister also explained that he intended to send a new proposal to Congress to replace the current spending cap rule dating back to 2016, which sets a limit on the growth of federal government spending over 20 years, from 2017 to 2036. The total amount spent by the Union as of 2016 will be adjusted by the official inflation measured by the Broad Consumer Price Index (IPCA).

The new fiscal measure is included in the Transition Constitutional Amendment, according to which the government must submit a complementary bill to Congress by August.

The spending cap is one of three fiscal rules with which the government must comply to prevent public accounts from getting out of control. The others are the primary result target - deficit or surplus -, set in the Budget Guidelines Law for each year, and the golden rule, instituted by Article 167 of the Constitution and which requires the government to request, in some cases, authorization from Congress to issue public debt bonds.

(Source: Agencia Brasil)