Brazil's new government says it has backing for big reforms

Reuters News
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Posted: May 13, 2016 2:26 PM

By Anthony Boadle

BRASILIA (Reuters) - Brazil's center-right interim government said on Friday it has the support in Congress to push through ambitious reforms to return the economy to growth and secure a permanent mandate once leftist President Dilma Rousseff's trial is up.

Presidential Chief of Staff Eliseu Padilha said the government understood its mandate was only provisional at present and that portraits of Rousseff would be left hanging in government buildings.

Interim President Michel Temer was sworn into office on Thursday after Rousseff was suspended from office by the Senate for up to 180 days while she is tried on charges of breaking budget rules.

The margin of the vote in the Senate to suspend her, 55 to 22, showed Temer's government currently has support in Congress needed for a series of tough economic reforms, Padilha said.

"We have enough support to pass urgent measures through Congress," he said.

A two-thirds vote in the upper house is needed to convict Rousseff and remove her from office permanently. Temer would then complete her term until 2018.

Despite having no electoral mandate, Temer promptly unveiled on Thursday an agenda of liberal reforms - including cuts to public spending and pension reforms - that would swing Brazil to the right after 13 years of leftist Workers Party rule.

The Workers Party has vowed to organize mass protests against Temer, whom it has dubbed a traitor, and to derail his legislative agenda in Congress, but Padilha said the new administration had the support it needed.

"We are convinced that we are going to do such a good job governing that the government that is provisional today will become definitive before 180 days are up," Padilha told a news conference following the government's first cabinet meeting.

Planning Minister Romero Juca said that pension and tax reforms were crucial to getting public debt under control in the midst of Brazil's worst economic crisis ever, though he said the government would avoid the kinds of drastic measures that fueled popular anger in debt-strapped Greece and Italy.

Previous governments have failed to tackle the country's burdensome pensions system, which consumes public money equal to 13 percent of gross domestic product, more than any G7 nation except Italy. The country has three pensioners for every 10 contributing workers.

Earlier on Friday, Finance Minister Henrique Meirelles said the government would unveil tough measures soon to curb a budget deficit that topped 10 percent of economic output last year, possibly including increasing taxes temporarily.

Experts have voiced concern that cutting public spending and raising taxes could further shrink the roughly $2 trillion economy, which is on track in 2016 for a second year of contracting by more than 3 percent - its worst performance since the 1930s.

(Additional reporting by Brad Haynes and Cesar Bianconi in Sao Paulo; Editing by Daniel Flynn and Mary Milliken)