In another attempt to boost Brazil’s flailing economy, the Rousseff-led government has announced a $17bn austerity package. On September 14, planning minister Nelson Barbosa unveiled plans to slash housing, social spending and sanitation. There will also be a freeze on hiring and pay rises in the public sector, as well as the abolishment of 10 ministries. Additionally, the package aims to raise around $7bn through a tax increase and the controversial reintroduction of a levy on financial transactions.
President Rousseff has an insurmountable challenge on her hands to win back public favour amid a second term of economic crisis
In August it was revealed that Brazil had entered into recession, which is expected to continue into 2016. The government forecasted the country’s GDP to fall by 1.49 percent this year, although others predict that it could shrink as much as 2.55 percent.
Just days before the austerity package was unveiled, Standard & Poor had downgraded Brazil’s credit rating to junk – which led to an overwhelming removal of foreign capital from the country. After the announcement was made, the real, which had plummeted to a 12-year low following Standard & Poor’s downgrade, has now risen by 1.5 percent to 3.8154 per US dollar – according to Bloomberg.
President Rousseff has an insurmountable challenge on her hands to win back public favour amid a second term of economic crisis, corruption scandals, growing unemployment and plunging commodity prices. In recent months, civilians have again taken to the streets to demand that the president faces impeachment and steps down. Although massive spending cuts will give the government some breathing space, a rigours stimulus package is crucial if the country is to pull out of recession.
