Brazil President Luiz Inacio Lula da Silva has tacked on an income-tax relief measure to a long-awaited plan to cut government spending, heightening concerns about the budget deficit and sparking a selloff in the currency,

Lula spoke during a ceremony for signing an addendum to the Transnordestina railway construction project at the Palácio do Planalto. The event was closed to press coverage, but his communications team released an audio recording of his remarks afterward.

Brazil's government on Wednesday proposed to expand income tax exemptions for lower-income Brazilians and increase taxes on those who earn more, while outlining plans to trim public spending in coming years.

Brazil Finance Minister Fernando Haddad unveiled a long-sought plan to cut 70 billion reais ($11.8 billion) from public spending through 2026 as investors’ fiscal concerns sink assets from the currency to stocks.