Brazil’s Economy Ministry tries to limit spending on fuel-related subsidies, sources say

By Marcela Ayres and Bernardo Caram

BRASILIA (Reuters) – Brazil’s Financial system Ministry is making an attempt to restrict the price of greater cooking fuel subsidies and a brand new money switch program for truck drivers, which the federal government is envisaging as a technique to ease the impression of hovering gasoline costs in an election 12 months, mentioned 5 sources accustomed to the matter.

The ministry desires the 2 measures to price between 4 billion reais and 6 billion reais ($770 million-$1.2 billion) this 12 months, in response to two of the sources, who requested anonymity because the discussions are preliminary.

The thought is that these measures might be a part of a proposed modification to Brazil’s structure, which is able to embody proposals already introduced by the federal government, reminiscent of decrease federal gasoline taxes and compensation to states for state gasoline taxes they forego.

The Financial system Ministry, which didn’t instantly reply to a remark request, doesn’t need the full price of the package deal, which is able to successfully bypass a constitutional spending cap, to exceed 50 billion reais, mentioned the sources.

Beforehand, the ministry was towards the try and bypass the cap. However President Jair Bolsonaro has been pushing for inflationary reduction whereas trailing former president Luiz Inacio Lula da Silva in polls for this 12 months’s elections, that are slated for October.

By together with the measures in a constitutional modification, the federal government can also be seeking to bypass current laws that largely bars the creation of recent advantages within the last six months of a presidential mandate.

All sources indicated that the ultimate format of the measures will not be but outlined.

One in all them mentioned that Financial system Minister Paulo Guedes wished a most of two billion reais for extra cooking fuel subsidies and 4 billion reais for truck drivers, lots of whom are loyal Bolsonaro supporters.

One of many options on the desk entails granting a month-to-month help cost of 600 reais to truck drivers, at a complete price of three billion reais. One other supply indicated {that a} advantage of 1,000 reais would slot in the funds if it have been paid solely to 600,000 truck drivers, although the ministry has not recommended the quantity.

The measures gained elevated traction after state-run oil agency Petrobras introduced final week it could elevate gasoline and diesel costs, triggering generalized protests within the political world and including strain to inflation that hit 11.7% within the 12 months to Could.

($1 = 5.19 reais)

(Reporting by Marcela Ayres and Bernardo Caram in Brasilia; Enhancing by Matthew Lewis)