Bloomberg News

Brazil’s Lower House Passes Bill Increasing Health Spending

September 21, 2011

Sept. 22 (Bloomberg) -- Brazil’s lower house approved a bill that would boost public spending on health care, making it harder for the government to meet its fiscal target next year.

In a 355 to 76 vote yesterday, lawmakers set new criteria for health spending that could boost outlays by 6.7 billion reais ($3.6 billion). States and municipalities are already required to spend 12 percent and 15 percent, respectively, of their revenue on health care. The bill, which now goes to the Senate, tightens the definition of what constitutes such spending.

According to Sao Paulo-based consulting firm Tendencias Consultoria Integrada, 15 out of 27 states don’t spend the required minimum on health care. Tightening the law would cost 6.2 billion reais for states and 500 million reais for cities, Tendencias estimates.

President Dilma Rousseff’s 2012 budget proposal, presented to Congress last month, targets a budget surplus before interest payments of 139.8 billion reais for the federal, state and local governments, the equivalent of 3.1 percent of gross domestic product. This year, the government is targeting a primary surplus of 128 billion reais, or around 3 percent of GDP.

“The government may have to concede in terms of the primary surplus target,” said Felipe Salto, Tendencias’s specialist in public finance. “Since the fiscal target involves all public sectors, states will get in trouble and the federal government will pay the price.”

Rousseff on Aug. 30 urged congressmen to come up with extra funding if they are committed to raising health care spending though stopped short of threatening a veto.

The bill must still be approved by the Senate, where some lawmakers are seeking changes that would commit up to 10 percent of the federal government’s revenue on health care, or about 31 billion reais, according to Tendencias. The federal government currently spends 6.6 percent of its annual revenue on health care.

--Editors: Harry Maurer, Jonathan Roeder

To contact the reporter on this story: Maria Luiza Rabello in Brasilia at mrabello@bloomberg.net;

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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