(Bloomberg) -- Brazilian assets tumbled on Thursday as prospects of a review in fiscal rules and signs of further spending ahead of next year’s election boosted concern over the nation’s fiscal trajectory. 

Traders weighed reports that President Jair Bolsonaro’s administration will seek to change how the spending cap, a rule that limits the growth of public expenses, is calculated. The change will free up about 40 billion reais ($7 billion) in the budget, according to people familiar with the matter, and allow Bolsonaro to increase social aid to the poorest. 

The president, who’s seen his popularity slide amid soaring food and fuel inflation, said on Thursday that the government will pay an aid to truck drivers to offset the impact of higher diesel prices. Bolsonaro, who’s up for re-election in 2022, gave no details on how he’ll fund the aid. 

The Ibovespa index was down 3.7% as of 3:31 p.m. in Sao Paulo, leading losses among over 90 primary global indexes tracked by Bloomberg. The Brazilian real weakened 1.5%, while swap rate contracts due in Jan. 2023 surged 90 basis points, neared trading limits. 




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