BRASILIA (Reuters) – Brazil’s incoming government will be fiscally responsible, Vice President-elect Geraldo Alckmin said Thursday, promising a budget surplus and reduction in public debt in effort to quell market unrest over a proposed welfare plan.
In a conversation with journalists, Alckmin addressed the market’s negative reaction to President-elect Luiz Inacio Lula da Silva’s proposed constitutional amendment to exempt at least 175 billion reais ($32.41 billion) from next year’s budget to pay for social programs.
“The market reaction is momentary. This will be clarified and overcome,” Alckmin said, adding that the government will discuss a new framework to replace an existing spending ceiling, which he said was a “priority” but will not happen immediately.
“The framework will be discussed,” Alckmin, a former two-time governor of Brazil’s Sao Paulo state. “There will be a surplus and debt reduction.”
Alckmin said the new government will also take measures to reduce expenses, by reviewing contracts and tax exemptions, for example, while defending tax reform as one of the main measures needed to help the country to grow.
“The key issue is a tax reform,” which will help spur GDP growth, he said, adding it would be approved as soon as possible, but he gave no deadline.
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(Reporting by Lisandra Paraguassu; Editing by Lisa Shumaker, Brendan O’Boyle and David Gregorio)