LatinNews Daily - 17 November 2022

In brief: Brazil’s Lula seeks to circumvent spending cap

*The transition team of Brazil’s president-elect Luiz Inácio Lula da Silva (Partido dos Trabalhadores, PT) has presented a proposal for a constitutional amendment (PEC) to congress which would allow the new administration to spend more than is stipulated by the so-called constitutional ceiling – a rule approved in 2016 that limits annual growth in government spending to the rate of inflation. The initiative was submitted to the leadership of the senate and lower house of congress by vice president-elect Geraldo Alckmin (Partido Socialista Brasileiro, PSB), the head of Lula's transition team. It indefinitely excludes from the cap all the resources that Lula intends to spend with Auxílio Brasil, the country’s main social programme, which are estimated at R$175 bn (US$32.4bn) in 2023. It is not clear whether the initiative has sufficient support to be approved in congress. Markets reacted strongly to the proposal yesterday: the US dollar increased 1.52% against the real and the main index of Brazil’s stock exchange (Ibovespa) fell 2.58%.

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