April 30, 2020 / 10:03 PM / a month ago

UPDATE 1-Brazil public sector wage freeze a 'small' price to pay -Treasury secretary

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By Jamie McGeever

BRASILIA, April 30 (Reuters) - Public sector workers in Brazil whose salaries will be frozen until the end of 2021 to help fund a federal aid package for cash-strapped states and municipalities will only be making a “small” sacrifice, Treasury Secretary Mansueto Almeida said on Thursday.

His comments came in an online discussion hosted by media outlet Folha de S. Paulo, on the same day Senate President Davi Alcolumbre presented a draft bill to deliver 60 billion reais ($11 billion) of aid to local authorities.

Almeida said the aid package was “good and necessary” for local authorities whose tax revenues will slump due to the coronavirus crisis, although its final size has yet to be determined by votes in the Senate and lower house of Congress.

Originally, the Economy Ministry proposed a package worth 40 billion reais. But on Wednesday Economy Minister Paulo Guedes said central government aid for local authorities could reach 130 billion reais, although many of those measures have already been announced.

Of the 60 billion reais outlined in the draft bill on Thursday, 10 billion is for health spending and the fight against coronavirus.

Almeida repeated his pledge that emergency spending will be confined to this year, noting the constitution and government fiscal rules mean spending increases cannot spill into 2021.

The government must show investors it remains committed to fiscal discipline over the long term, otherwise it could face problems financing its debt even in the short term.

If the crisis persist, however, the government will have to consider which emergency measures can be extended and by how much, Almeida said.

Earlier on Thursday, Guedes said a government program, in conjunction with the private sector, to reduce workers’ salaries and hours had saved 4.3 million jobs so far, with the number likely rising to 5 million eventually.

$1 = 5.45 reais Reporting by Jamie McGeever, additional reporting by Maria Carolina Marcello; Editing by Sandra Maler and Tom Brown

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