(Bloomberg) -- A Brazilian Supreme Court justice rejected a request to reconsider a ruling that has complicated relations between the judiciary, government and Congress, potentially denting President Luiz Inacio Lula da Silva’s efforts to win approval for his fiscal austerity plan.
Judge Flavio Dino said Monday that he would not re-examine a Supreme Court decision that demanded more transparency in the release of some so-called parliamentary budget amendments, which are used to fund projects in lawmakers’ home states.
Attorney General Jorge Messias had requested the review in a bid to end an impasse over the amendments that has dragged on for months and is now threatening to delay highly-anticipated votes on public spending cuts.
“There is nothing to reconsider,” Dino wrote in his decision, saying that the court’s requirements already exist in the Brazilian constitution.
Swap rates rose on Monday after Dino issued the decision, as investors continue to question Brazil’s ability to shore up fiscal accounts.
The ongoing dispute over budget amendments has played a central role in Lula’s efforts to win congressional approval of his government’s 70 billion reais ($11.5 billion) spending cut package, a plan meant to soothe market fears about the country’s fiscal outlook.
Over the weekend, lower house Speaker Arthur Lira warned in an interview with local website UOL that the package won’t win support in the lower house or Senate without a resolution to the dispute, which began when Dino ruled that the amendments could not be paid unless there was more transparency around how and where the funds are distributed.
Lula later signed a law approved by Congress instituting new rules. In the decision Messias asked him to reconsider, Dino allowed the payments to resume but placed even stricter limits on them than the new law does.
The government is seeking to push the austerity plan, which includes limits on growth of the minimum wage and tightens rules on social benefit payments, through Congress before the end of the year, as investor skepticism about Lula’s commitment to fiscal discipline continues to weigh on Brazilian assets.
The real fell to its lowest point ever against the dollar after the package was unveiled, and currently ranks as the world’s worst-performing major currency this year.
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