By Rodrigo Viga Gaier and Ricardo Brito
RIO DE JANEIRO/BRASILIA (Reuters) - Brazil is preparing a fresh round of emergency cash transfers to millions of poor and vulnerable people, President Jair Bolsonaro said on Monday, adding that any package will also take into account investor concerns over the government's fragile finances.
Bolsonaro's remarks came after a government source involved in the negotiations told Reuters that the program would be smaller than last year's, which expired on Dec. 31, and would come with more strings attached.
"I think there will be an extension," Bolsonaro said in an interview with the TV program Brasil Urgente.
"We are not going to run away from the issue of emergency aid. A large part of the population is in difficulty," Bolsonaro said, warning that further fiscal stimulus must be done in a responsible manner.
If not, financial markets could be spooked and the real could weaken to as low as 6 per dollar, Bolsonaro warned.
Earlier on Monday, a government source said the proposal is for three monthly installments of 200 reais ($37) aimed at millions of informal workers not already signed up for the "Bolsa Familia" benefit scheme, at a cost of around 6 billion reais ($1.1 bln) a month.
Arthur Lira, the newly-elected speaker of the lower house, tweeted on Monday morning that both chambers and the executive branch must draw up a viable program "for those who need it most," while "always respecting the spending cap."
Senate leader Rodrigo Pacheco told GloboNews he was very optimistic that a package could be put together this week, but also stressed it must be compatible with keeping the public finances under control.
The government's constitutional spending ceiling limits the growth in public spending to the previous year's rate of inflation. Economy Minister Paulo Guedes insists it is the government's fiscal "super anchor" and must not be breached.
Last year's emergency spending was approved under a "state of calamity" budget and was not subject to the usual budget rules, which meant the cap was not officially broken.
Financial markets have become unnerved that the cap could break this year if the government revives emergency pandemic stimulus, pushing up market-based interest rates and pushing down the currency.
($1 = 5.40 reais)