Brazil Senate passes bill to cap gov't spending for next 20 years

Brazil's Senate on Tuesday passed a controversial constitutional amendment that limits government spending for the next 20 years.

The bill submitted by President Michel Temer's government easily passed by a vote of 53 to 16, though several lawmakers allied with the conservative ruling party decided not to vote in favor due to public anger at the measure.

Opponents of the Constitutional Amendment Bill, or PEC, fear it will hurt Brazil's poor the most by curbing government expenditure on anti-poverty campaigns, education and health, among other social welfare programs.

Part of a government plan to rein in the public deficit, the PEC is to be enacted by Senate President Renan Calheiros on Thursday.

Starting in 2017, the bill will limit spending "to the official inflation rate of the previous year," according to the Agencia Brasil news agency.

Bowing to pressure, the government has said health and education will not be subject to the bill until 2018.

Some 60 percent of Brazilians are opposed to the bill, a survey by polling firm Datafolha showed on Tuesday.

Substantial public spending in the past two decades has helped lift millions out of poverty, but also led to a public deficit that amounts to 70 percent of the gross domestic product (GDP). The average rate for developing countries similar to Brazil is 45 percent.

On Friday, the United Nations Special Rapporteur on extreme poverty and human rights, Philip Alston warned that Brazil's proposed austerity measures "are entirely incompatible with the country's human rights obligations."

The PEC, he said, "will hit the poorest and most vulnerable Brazilians the hardest, will increase inequality levels in an already very unequal society, and definitively signals that social rights are a very low priority for Brazil for the next 20 years."

But backers of the bill celebrated.

In a speech at presidential headquarters, Temer thanked senators for passing "the first amendment aimed at lifting the country out of the recession."

Finance Minister Henrique Meirelles told reporters at a press conference, "the belt-tightening is going well, its most important measure was approved today."

Central Bank of Brazil President Ilan Goldfajn said passing the bill was an "important step" to lowering interest rates. Enditem