Brazil lower house passes pandemic aid in first vote, final approval pending

Brazil lower house passes pandemic aid in first vote, final approval pending

BRASILIA: Brazil's lower house of Congress early on Wednesday approved the core text of a constitutional amendment to revive a federal cash transfer program to help millions of poor affected by the COVID-19 pandemic.

The first-round vote approved by 341 votes to 121 the measure to allow emergency cash payments totaling up to 44 billion reais ($7.6 billion), with a second and final vote scheduled for later Wednesday.

Brazil's Senate passed the amendment last week.

The aid package will not be subject to the government's usual fiscal rules, but the bill includes counter measures delivering fiscal savings over coming years to mitigate the impact on fragile public finances.

Economy Ministry and central bank officials, as well as investors, have warned that any increase in spending must be matched by savings elsewhere in the budget to show the government's long-term commitment to reducing its record debt.

The package of 44 billion reais, worth around 0.6% of gross domestic product, is expected to be spread out over four months, with recipients getting an average of 250 reais per month.

The government's emergency aid to millions of poor families last year totaled some 322 billion reais, worth around 4.5% of GDP, and expired on Dec. 31. It ensured the economy's 4.1% slump last year was nowhere near as bad as many had originally feared, but it also fueled a record budget deficit and public debt.