Lula's Government Should Revise Brazil's Mandatory Spending Constraints, Says Haddad
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BRASILIA, (Reuters) – Once the reform of Brazil's tax system is decided, the Finance Minister Fernando Haddad says that the government will review the rules on increasing mandatory expenditures and budget restrictions before the year ends.
Haddad stated in an interview with the newspaper Folha de Sao Paulo published on Saturday that he wanted to talk about a rule to end the cutting and changing and give greater stability to these types of expenditures.
He said that progressive governments remove the rule linking spending to revenue growth and then conservative government reintroduces them, ending its obligation to spend a fixed amount in areas like education and health.
Brazilian governments are always faced with spending problems because 95% is allocated to mandatory expenditures, leaving only 5% as discretionary.
Treasury officials stated that it was necessary to change the current floor of spending on education and health, which is linked to government revenue, in order to avoid cuts in other areas.
Haddad said that he couldn't predict which expenses will be revised. He also could not say if they would include the readjustment the minimum wage or the remuneration for public servants. These decisions are up to Luiz Inacio Lula Da Silva.