(Adds minister comments, reform details and context)
BRASILIA Oct 3 A revised draft of a
constitutional reform to limit Brazil's public spending to the
inflation rate will only include health and education costs
starting in 2018, Finance Minister Henrique Meirelles said on
Otherwise, the new draft kept most of the main points first
proposed for the reform, which is due for a vote by a special
commission of the lower house on Thursday, Meirelles said.
The proposed index to cap spending, Mereilles added, could
be changed 10 years after the measure was implemented. Future
administrations would be allowed to make changes.
"We believe that the reform will be approved with those
original items that are fundamental," Meirelles told reporters
in the capital Brasilia.
He said that as of 2018 the index will be capped at the
12-month inflation rate until June of the previous year. For
2017, the index was set at 7.2 percent, the expected inflation
rate for 2016.
The ceiling is one of the main proposals of President Michel
Temer, who has vowed to rebalance public accounts in a country
still working its way through its worst recession since the
Heavy government spending in recent years fueled inflation,
increased debt and cost Brazil its investment grade rating. In
addition to the spending cap, Temer has also promised a
controversial reform to reduce expensive pension benefits.
The author of the spending draft, Darcisio Perondi, a
lawmaker with Temer's party, said that expenditures in health
and education could have decreased in 2017 had the government
included them in the proposal.
But even amid recession, expenses on health and education
remain contentious in a country known for decrepit schools and
hospitals that at times lack basic cleaning and medical
Temer and many economists argue that limiting government
spending is crucial for Brazil to reduce a growing debt burden
that could top 73 percent of the gross domestic product this
(Reporting by Alonso Soto; editing by Grant McCool)