BRASILIA (Reuters) -Brazil’s Finance Minister Fernando Haddad on Tuesday said that the government’s new fiscal rules and a tax reform should calm investors and the central bank and that there is consensus on the urgency of approving both.
After a closed-door meeting with government officials, top lawmakers and business leaders, Haddad told reporters he expects both houses of Congress to approve the new fiscal rules before the year’s second half, while only the lower house will likely vote on the tax reform in that time frame.
The fiscal rules would replace a more rigid cap on spending that limits growth in expenditures to the previous year’s inflation rate. The tax reform aims to simplify the tax code, though details remain murky.
“These will give a great deal of tranquility to investors, the monetary authority and ministers, so that they will be able to work for the well-being of the country,” he said.
Haddad lauded discussions around both issues, saying his ministry is so far comfortable with the dialogue with lawmakers around spending.
Brazil’s proposed fiscal framework bill is set to be voted by the lower house on Tuesday after discussions with party leaders. The bill was officially presented in the chamber Tuesday afternoon.
Claudio Cajado, the lawmaker in charge of the bill in the lower house who has previously proposed to toughen the fiscal rules, said later on Tuesday the bill will provide the government the possibility of increasing spending by up to 70% of any increase in tax revenues, as long as it does not exceed a rate of 2.5% above the country’s inflation.
(Reporting by Bernardo Caram; Writing by Peter Frontini; Editing by David Gregorio)