Brasilia, Mar 18 (efe-epa).- Brazil’s government will request that Congress declares a state of public calamity, a measure that will allow more public spending beyond agreed budgets to cope with the impact of the coronavirus pandemic.
The measure, which requires the prior approval of the Chamber of Deputies and Senate, will allow the government to scrap its constitutional cap on expenditure set for this fiscal year.
The approved state budget proposes a deficit of $24.8 billion, equivalent to 1.5 percent of Brazil’s GDP.
However, declaring a state of public calamity will not spare the Jair Bolsonaro government from abiding by a law approved in 2017 which limits the growth of annual public spending to the previous year’s inflation rate, which in this case was 4.31 percent.
Either way, the measure is a radical change for an ultra-liberal government that, up until now, had set a goal of minimizing the state’s influence on the national economy.
The decision represents a further step in the release of resources to combat the Covid-19 pandemic which has caused two deaths in the country, with just over 300 cases.
According to the Ministry of Health, it is “just beginning” in Brazil as the country braces for a spike in infections.
Health authorities have said that the peak of the pandemic will occur between June and August in the middle of winter and warned financial resources would have to be freed to face the emergency.
Until now, the far-right Bolsonaro government has announced various measures to try to mitigate the battering Brazil’s economy will take with the spread of coronavirus.
This week, the Ministry of the Economy announced a crash plan that will inject $29.1 billion into the economy.
Almost 50 percent of the funds will go to the most in need through social assistance payments.
Company taxes will be deferred for around three months and it will be made easier for people to access workers’ severance funds.
The health care sector will receive an almost $1 billion boost that has already been released from the budget.
Even with these measures, the government reaffirmed in an official statement published on Wednesday its “commitment to the structural reforms necessary for the transformation of the State.”
The statement added that the reduction of the size of the state continues to be a priority as this will “guarantee the confidence and investments necessary to recover a dynamic and sustainable growth.”
The coronavirus pandemic comes at a time when the Brazilian economy is still recovering from the 2015-2016 recession, the second deepest in the country’s economic history.
In 2017 and 2018, growth recovered, but at a rate of 1.3 percent per year, only to lose strength in 2019, with a 1.1 percent growth rate.
The government had projected a 2.3 percent growth for 2020 but has already lowered that forecast to 2.1 percent and may be forced to drop it further as a result of the pandemic. EFE-EPA