Brazil lawmakers pass 'war budget' as coronavirus cases top 10,000
Brazil’s lower house of Congress approved a constitutional amendment for a “war budget” to separate coronavirus-related spending from the government’s main budget and shield the economy as the country surpassed 10,000 confirmed cases, Trend reports citing Reuters.
The war budget still needs the Senate’s approval by three-fifths of the votes in two rounds expected to take place next week.
Late on Friday, the lower house approved the main text of the bill with 423 votes in favor and one opposed in a second round of voting after a first score of 505 in favor and two against.
The amendment creates an extraordinary regime to prevent expenses related to a “state of emergency” decree triggered by the pandemic, which is valid until Dec. 31, from being mixed with the federal budget over the same period.
Besides easing fiscal and budgetary constraints to speed up measures tackling the outbreak, the war budget also grants the Brazilian central bank emergency bond-buying powers to stabilize financial markets.
“We must ensure money reaches key sectors, so as of this week we’ll start discussing what we want to buy and what kind of intervention we want to make,” Brazil’s central bank president, Roberto Campos, said in a live presentation to XP brokerage on Saturday evening.
Campos sees the ongoing crisis as much worse than the 2008 one, noting that the COVID-19 outbreak has unleashed the largest outflow ever seen in emerging markets, with the Brazilian stock exchange and currency among the most affected.
“But we moved quickly to boost market liquidity and we still have an arsenal of measures to adopt,” he said, adding the financial system is solid enough and actions altogether have the potential to inject up to 1.2 trillion reais ($224.32 billion) in liquidity.
Campos declined to comment on the duration of social isolation measures, but urged market participants to avoid breaching contracts, echoing earlier remarks by Economy Minister Paulo Guedes.
“We can renegotiate everything, rents, salaries, but we must not default,” Guedes told representatives of retail and services industries separately on Saturday.