SAO PAULO (Reuters) – Brazilian President Jair Bolsonaro said on Wednesday that funding for a proposed new welfare program will fit within the country’s budget, adding that “no one” will disrespect the government’s constitutional spending limit.
His remarks came after investors were spooked on Tuesday by reports of a generous new welfare program partially exempted from the spending cap. The government called off an event to announce the program after Brazil’s currency and stocks tumbled on concerns of slipping fiscal discipline.
The Brazilian real extended gains against the U.S. dollar in Wednesday trading after Bolsonaro’s comments, strengthening around 1%, while the Bovespa stock index was up 0.3% in early afternoon trading.
Bolsonaro told an audience in the state of Ceara that the new welfare program, called ‘Auxilio Brasil’, would pay 400 reais ($72) per month to poor families, but that the government has the “responsibility” to make it fit the spending cap.
The current ‘Bolsa Familia’ welfare program pays families an average of about 190 reais.
($1 = 5.5356 reais)
(Reporting by Gabriel Araujo in Sao Paulo and Ricardo Brito in Brasilia; Editing by Brad Haynes)
