By Brad Haynes and Luciano Costa
SAO PAULO, Sept 30 Brazilian President Michel
Temer said on Friday he wants to "vaccinate" the country against
"fiscal populism" with constitutional reform limiting increases
in public spending that he expects to be approved by Congress.
Temer said without the constitutional reform, Brazil's
public debt could reach 100 percent of gross domestic product
(GDP) by 2024, and he appealed to business leaders and the media
to campaign in favor of its approval.
"On taking over the presidency, we had a mission, to
inoculate Brazil with a vaccine to make it immune to fiscal
populism," he said.
The flagship reform, which would limit increases in public
spending to below the inflation rate of the previous year, will
face its first hurdle in a special commission of the lower house
The measure could receive final Congressional approval
before the end of October, but investors who have snapped up
Brazilian assets on hopes of market-friendly reforms are
nervously eying proposals to water down its impact in coming
In a reminder of the enormous budgetary challenge facing
Latin America's largest economy, which lost its coveted
investment grade rating last year, data on Friday showed
Brazil's primary budget deficit hit a record 22.267
billion reais ($6.88 billion) in August, well above market
"Our legislators have an unequivocal commitment with the
priorities imposed by the situation of Brazil," said Temer, who
officially took power last month when his left-leaning
predecessor Dilma Rousseff was impeached.
"The origin of this economic crisis was essentially domestic
and fiscal," he told a business forum in Sao Paulo.
While economists say Brazil's $2 trillion economy could
emerge from its worst recession in decades in the final quarter
of this year, unemployment in Latin America's largest country is
expected to continue rising.
Data from statistics agency IBGE showed on Friday the
unemployment rate rose to 11.8 percent in the three months
through August, slightly above expectations in a
Rousseff's Workers Party, which ruled Brazil for 13 years
until she was impeached by Congress last month on charges of
breaking budget rules, has accused Temer's government of
planning to scrap welfare programs that dragged millions of
people out of poverty during the previous decade.
Temer said that, given the situation in the country, his
center-right government would combine budgetary and social
He said that, with considerable social needs in Brazil, the
state had an important role to play in the economy, but one that
also recognized the importance of the private sector.
(Writing by Daniel Flynn; Editing by Jeffrey Benkoe)