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Brazil to pass war budget in response to COVID19

Brazil’s lower house of Congress has pushed forwards a “war budget” in response to the COVID 19 pandemic which aims to distinguish spending on the government’s response to the coronavirus from their main budget.

The announcement of a war budget follows the rising number of confirmed cases in Brazil which has surpassed 10,000. In the lower house, the bill passed with two rounds of voting, both times gain the majority of support. The bill still needs to be approved by the Senate by a three-fifths vote in two rounds.

Reuters reports that in addition to easing fiscal and budgetary constraints it will permit Brazil’s central bank to grant emergency bond-buying powers to stabilise financial markets.

Roberto Campos, Brazil’s central bank president, warned that due to the outflow, the economic impact could be worse for Brazil than the 2008 crash. Despite this Campos avoided commenting on social isolation measures and maintained the importance of avoiding breaching contracts.

Economy Minister, Paulo Guedes, has shared these sentiments stating;

“We can renegotiate everything, rents, salaries, but we must not default”

Guedes emphasised that whilst credit was not reaching those in need, deeper structural reforms were needed including tax cuts.

He stated on the matter;

“Our way out of this crisis further ahead will be through tax cuts ... Creating jobs must be easy, cheap and stimulating”.

This response from the Brazilian govern follows the President, Jair Bolsonaro, underling the serious of the pandemic describing it as a “little flu”. More recently, Bolsonaro called on supporters to undertake a day of prayer and fasting to “free Brazil from this evil” virus.

Read more from Reuters.