Belt-tightening in Brazil aimed at fighting economic crisis

AP News
Posted: May 24, 2016 3:06 PM
Belt-tightening in Brazil aimed at fighting economic crisis

RIO DE JANEIRO (AP) — Brazil's interim president announced austerity measures on Tuesday aimed at pulling Latin America's largest economy from its worst crisis in decades, warning that a failure to act would sentence future generations to "extraordinary hardship."

Speaking with government leaders in a national televised meeting, Interim President Michel Temer, 75, also banged his hand on the table while insisting he was up to the job.

Temer said the government would get an early repayment of about $28 billion from Brazil's state-run investment bank BNDES and immediately abolish a fund created to channel oil revenues into education.

The interim president also pledged to limit growth in government spending to the rate of inflation, currently around 10 percent.

The most aggressive belt-tightening plans will depend on Congress, which must vote in coming months whether Temer will stay in office through 2018 or allow suspended President Dilma Rousseff to return after an impeachment trial.

Temer, who was vice president, took over this month after Rousseff was impeached by the Senate for allegedly using accounting tricks in managing the federal budget. Rousseff has argued she did nothing wrong, and promised to fight permanent removal at her upcoming trial.

Interim leader for less than two weeks, Temer has come under mounting criticism on several fronts, from his decision to appoint a Cabinet of all white men to unpopular ideas his finance minister has floated, like raising taxes.

Things got worse for Temer's government on Monday, when Planning Minister Romero Juca said he was going on leave after a recording emerged in which Juca appears to be arguing that Rousseff had to be impeached to tamp down a sprawling investigation of a multi-billion dollar kickback scheme at state oil company Petrobras.

"I have heard: 'Temer is very frail, poor thing, he cannot govern. Nonsense!'" said Temer, whose normal mild manner has earned him the nickname "butler." ''I was public security secretary twice in Sao Paulo and I had to deal with criminals. I know what to do in government."

He was vague about a timeline for introducing legislation on his "No. 1 priority" of reforming the country's pension system. Last week, he appointed a commission to study and negotiate a reform. However, two of the country's largest unions refused to participate, saying they don't recognize his government.

"Further down the road, we will sentence the Brazilian people to an extraordinary hardship if we don't act," he said.

Brazil's economy, an important engine for many South American nations, is expected to contract around 3 percent this year after a fall of almost 4 percent in 2015.

Temer faces huge challenges to getting reforms through Congress. While many lawmakers rallied around the idea of impeaching Rousseff, agreeing on thorny reforms will likely prove much more difficult.

Temer also has his work cut out for him in convincing Brazilians that he can turn things around.

The IBOPE institute on Tuesday published a poll saying only 31 percent of Brazilians reported being "optimistic" or "very optimistic" about Temer's prospects, while 34 percent said they were "pessimistic" or "very pessimistic" and 30 percent reported feeling indifferent. Five percent did not respond.

The poll interviewed 2002 people between May 12 and May 16 and had a 2 percentage point margin of error.