Brazil lower house gives initial approval to government fiscal package
Adds background, context in paragraphs 4-9
BRASILIA, Dec 18 (Reuters) -Brazil's lower house of Congress late on Tuesday approved the main text of a bill that is part of a fiscal package proposed by the government, which includes spending cuts aimed at putting the country's finances on a more sustainable footing.
Doubts about lawmakers' ability to pass the package before the year-end recess have weighed on local markets, driving a steep sell-off in the Brazilian real in recent days on concern over government spending.
The lower house has yet to vote on some amendments proposed by lawmakers to the main text, as well as on some other projects related to the full package. Following final approval, they would then be voted on by the Senate.
The bill passed on Tuesday controls the growth of personnel costs and prohibits the granting or expansion of tax benefits if public accounts face a primary deficit, while imposing stricter controls on the growth of so-called Congress "amendments".
Those "amendments" are mechanisms that allow lawmakers to allocate public funds and have surged in recent years, consuming a larger portion of Brazil's budget.
The text approved by the lower house "strengthens Brazil's main fiscal rule and contributes to the rationality of public spending", said Congressman Atila Lira, who sponsored the bill, in a reference to the fiscal framework passed in 2023.
President Luiz Inacio Lula da Silva's administration announced in late November that thepackage aimed to secure savings ofmore than 70 billion reais ($11.47 billion) over the next two years.
Lula has called on Congress not to water down the measures.
The lower house has yet to vote on two other proposed bills - also part of the wider fiscal package - that would cap minimum wage increases and set stricter rules for the annual "wage bonus" granted to low-income formal workers.
($1 = 6.1048 reais)
Reporting by Marcela Ayres and Gabriel Araujo
Editing by Christina Fincher and Gareth Jones
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