October 21, 2015•Update: October 28, 2015
By Ben Tavener
SAO PAULO
A new proposal for the 2016 federal budget will seek to cut 10 billion reais ($2.6 billion) from a cash transfer program to poor families, the budget's rapporteur said Tuesday.
The Bolsa Familia social welfare program was introduced in 2004 under former President Luiz Inácio Lula da Silva and is credited with helping Brazil lift millions out of severe poverty over the last decade.
Deputy Ricardo Barros told local media that he would propose a 35 percent cut to the program's budget -- 10 billion reais from a total of 28.8 billion reais allocated by the previous proposal.
The congressman and budget rapporteur plans to achieve the reduction by preventing new families from joining the program, but suggested families already receiving the handouts should continue to do so.
"We need to be rational and not react with emotions: I'm not going to vote for a budget deficit," Barros was quoted by the Folha de S.Paulo newspaper. "I want to pass a budget that the market believes in."
It comes after the previous budget plan proposed an unprecedented deficit of 30.5 billion reais ($7.8 billion) that spooked investors and triggered downgrades by two credit ratings agencies -- one into speculative or "junk" territory.
The government has other plans to bridge the budgetary shortfall, including reviving an unpopular levy on financial transactions, previously discontinued in 2007, which it hopes will generate 32 billion reais.
But the reintroduction of the CPMF, as the tax is known, faces strong opposition, with Barros calling the plan "inviable".
Nearly 14 million families currently receive the cash transfer payment, according to the government. Payments are contingent on recipients' children attending school regularly and getting required vaccinations.
The suggestion is potentially controversial as its implementation helped bolster voter support for Lula and his leftist Workers' Party, of which incumbent President Dilma Rousseff is also a member.
Unlike Lula, who left office with approval ratings near 90 percent, Rousseff's popularity is in the single digits -- dragged down by an economy in recession, implications of a sprawling corruption scandal at state-run oil giant Petrobras and threats of impeachment for allegations of fiscal irregularities in the government's 2014 accounts and her recent re-election campaign.
