Bill to cap government expenses criticized in Brazilian Senate

A proposed bill for a constitutional amendment to limit government expenses for 20 years, which was approved in the Brazilian House of Representatives, was criticized in the Senate on Tuesday, local media reported.

The proposed amendment to the constitution stipulates that, for the next 20 years, public spending could only increase yearly at a percentage equivalent to the previous year's inflation rate, according to Brazil's official news agency Agencia Brasil.

The government hoped that the approval of the bill will restore the confidence of citizens and investors in the country.

Laura Carvalho, an economics professor at the Sao Paulo University, said on a Senate hearing on Tuesday that the bill will not solve Brazil's fiscal unbalance.

The idea behind the bill is that Brazil is facing a fiscal crisis because of rising expenses, but the real cause is a fall in tax collection due to the economic crisis, She said.

The fiscal adjustment made by then President Dilma Rousseff last year contributed to even lower collection, she said.

She said that tying the increase in investment to the inflation rate will make the economic policy less flexible. She also criticized the decision to lower public investment as a means to deal with the crisis. Endit