Brazil’s lower house approved the measure, which amends the constitution to circumvent the country’s spending cap and increase social benefits. It must now be officially signed into law by both houses in a joint session of Congress.
The package includes a payment of 1,000 reais ($185) for self-employed truckers, benefits for taxi drivers and a 50% increase in social benefits.
The bill has raised concerns among investors, who believe it demonstrates a lack of fiscal discipline on the part of the government. The government argues that it must act urgently to help Brazilians suffering from high inflation.
But the new legislation is likely to further stoke inflation which is currently around 12% and could lead to further monetary tightening, Reuters analysts said. The dollar has already gained 13.95% against the real since the beginning of June.
Bolsonaro is trailing leftist former President Luiz Inacio Lula da Silva in opinion polls ahead of the October vote. The former far-right army captain’s popularity has been hurt by high inflation, a weak economy and his handling of the COVID-19 pandemic.