Brazil’s Chamber Approves Exemption for Fundo Social Health and Education Spending From Fiscal Cap

Overview

• The measure passed the Chamber by 320–109 and now advances for presidential sanction.
• Temporary investments in health and education funded by the Fundo Social will no longer count toward the arcabouço fiscal’s spending-growth limits or the government’s fiscal-target calculation.
• A July law earmarks 5% of annual Fundo Social inflows for these programs, equating to about R$1.5 billion per year for five years.
• Chamber rapporteur José Priante accepted all Senate changes, and lawmakers deleted a provision that would have excluded expenses financed by international loans after opposition criticism linked to Gripen purchases.
• Bill author Isnaldo Bulhões argued the carve-out prevents an equivalent squeeze on discretionary investments, while party voting showed broad government-aligned support, unified opposition from Novo, and a split PL bench.