An ambitious constitutional amendment to freeze budget spending would cut the uncertainty over public finances that is the root cause of Brazil’s deep recession, according to the country’s new finance minister.

"With this kind . . . of tough fiscal policy . . . everyone will be able to project the numbers," Henrique Meirelles said.

The plan to eliminate real increases in budget spending for up to 20 years is the central plank of a number of reforms – from fiscal policy to rules on pensions and the operation of state oil company Petrobras – that the government of interim president Michel Temer is rushing through congress.

Elevated to power by an impeachment process against president Dilma Rousseff for allegedly manipulating the budget, Mr Temer is staking his leadership on stabilising the economy and stemming an alarming rise in public debt.

Once a fast-growing emerging market, Brazil’s GDP shrank 3.8 per cent last year and is expected to decline by the same amount this year.

– Copyright The Financial Times Limited 2016