BRASILIA (Reuters) -Brazil's Senate Economic Affairs Committee has granted the opposition a 24-hour delay on a vote on new fiscal rules considered crucial by the government of President Luiz Inacio Lula da Silva.
The new fiscal framework, mentioned by S&P in its outlook improvement for Brazil, is seen a key tool for the government to show its commitment to keeping spending in line despite Lula's pledge to raise outlays on the poor.
The committee's chairman, Senator Vanderlan Cardoso, granted a 24-hour extension at the request of opposition Senator Rogerio Marinho, who served as a minister under former President Jair Bolsonaro.
The sponsor of the bill, Senator Omar Aziz, had wanted a vote on Tuesday and urged colleagues not to postpone.
After committee approval, the project must receive a full vote on the Senate floor, a move Senate President Rodrigo Pacheco has said he will prioritize.
Senate changes to the bill would then require another round of voting by the lower house, which has already approved the measure.
Bill sponsor Aziz has removed an education fund and a constitutional fund for the Federal District from the spending limit imposed by the framework. Aziz also stripped expenditures related to science and technology from the cap.
Tiago Sbardelotto, an economist at XP (NASDAQ:XP), expressed concern that the removals weaken the new fiscal framework by allowing some spending to grow unrestricted and putting pressure to expand the list of exceptions.
However, Aziz has not modified the timeframe for adjusting expenditures based on inflation, a point that the Planning Ministry said would help the government draft the 2024 budget bill, due to be presented by August.
The current bill establishes a limit on real growth in public spending based on inflation in the 12 months to June of the previous year, plus up to 70% revenue growth.
Due to lower inflation projected for the period this year, resulting from tax cuts implemented in 2022, there will be a need to cut 32 billion to 40 billion reais ($6.6-8.3 billion) from next year's budget, according to Planning Minister Simone Tebet.