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Legality of Brazil’s Spending Cap Questioned

  • Reuters

FILE - Demonstrators protest outside the Olivos presidential residence against the visit of Brazilian President Michel Temer in Buenos Aires, Argentina, Oct. 3, 2016.

FILE - Demonstrators protest outside the Olivos presidential residence against the visit of Brazilian President Michel Temer in Buenos Aires, Argentina, Oct. 3, 2016.

Brazil’s Prosecutor-General’s Office on Friday questioned the constitutionality of President Michel Temer’s proposed public spending cap and recommended that Congress shelve the austerity measures.

The office said in a statement the proposal interferes with the autonomy of other federal powers and would weaken the country’s judicial system, handicapping efforts to combat corruption.

“The proposal invades the judicial system budgeting competence drastically, risking to impact the exercise of its constitutional and institutional functions,” the statement said.

FILE - Brazil's President Michel Temer gestures as he attends an economics and politics forum in Sao Paulo, Brazil, Sept. 30, 2016.

FILE - Brazil's President Michel Temer gestures as he attends an economics and politics forum in Sao Paulo, Brazil, Sept. 30, 2016.

The unprecedented constitutional amendment, which limits the growth of federal spending to the rate of inflation for 20 years, is aimed at gradually closing a yawning budget gap that topped 10 percent of gross domestic product last year.

It is the first of a series of austerity measures to assuage market concerns that the once-booming economy, which was stripped of its investment grade rating last year, could be hurtling towards a debt crisis.

A lower house committee approved the proposal Thursday, handing Temer an initial victory on the battle to pass the amendment.

Its approval requires two votes in the plenary of the lower house and two more in the Senate, needing a three-fifths majority in each.

A first vote in the full lower house chamber should take place early next week.

There was no immediate comment from the president’s office regarding the recommendation.

The Prosecutor-General Office also said it was worried that the spending limits could affect a major investigation into corruption in Brazil and asked that money for that type of work be left out of the spending limits.

Rodrigo Janot, the Prosecutor-General, leads the ongoing probe into Brazil’s biggest corruption scandal centered around state-controlled oil company Petróleo Brasileiro SA.

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