September 5, 2019 / 1:00 PM / 10 days ago

Brazil's Bolsonaro reverses course, now says supports spending cap

Brazil's President Jair Bolsonaro speaks during a ceremony at the Planalto Palace in Brasilia, Brazil September 3, 2019. REUTERS/Adriano Machado

RIO DE JANEIRO (Reuters) - Brazilian President Jair Bolsonaro on Thursday defended a cap on public spending, changing course overnight after his spokesman said the leader had asked his economic team to change one of its key fiscal rules aimed at reducing the country’s deficit.

“We have to preserve the spending cap law. Yes, we must reduce expenses, combat fraud and waste,” Bolsonaro said on Twitter.

“To give up the cap is to open a crack in the hull of an ocean liner.”

The law requires public spending be capped at the annual inflation rate of the previous year. The spending limit was instituted under ex-President Michel Temer in 2016 as one of several austerity measures designed to shore up the government’s porous finances.

Bolsonaro alluded to changing the law on Wednesday in remarks confirmed later that evening by his official spokesman, before sending the early morning tweet on Thursday negating the remarks.

Bolsonaro’s economic team favors keeping the cap in place, sources told Reuters.

Reporting by Pedro Fonseca; Writing by Jake Spring; Editing by Chizu Nomiyama

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