(Bloomberg) -- Brazil plans to use a social fund that receives oil and gas exploration royalties to help boost the economy as opinion polls show President Luiz Inacio Lula da Silva’s popularity slumping to all-time lows.
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A provisional measure published late on Thursday installs a committee to manage the social fund that was created in 2010 to invest part of the revenue from Brazil’s pre-salt oil exploration into education. The committee, which will decide the destination of about 20 billion reais ($3.5 billion) the fund has accumulated since then, may use the money for general budget purposes or transfer it into different funds, according to a finance ministry official.
While any use of that money will still count as primary spending, and thus subject to the country’s fiscal rules, it comes at an opportune time for the government as the economy is slowing down, likely reducing tax revenue.
It may also be used to bolster other social programs that could give a boost to Lula’s popularity, which has been declining due to a spike in food prices and growing concerns about criminality.
The money won’t be spent right away, however, as the government may take up to 60 days to regulate the committee, and only then it will start to discuss the destination of the funds, the official said. That means any impact on the economy may only be felt in the second half of the year.
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