government wants to reduce programs such as Bolsa Familia, potentially excluding a staggering 36 million people from the initiative. ">
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News > Latin America

Surprise, Surprise! Brazil Coup Govt to Impose Austerity

  • A worker pushes boxes with food at a street market in Rio de Janeiro, Brazil, May 6, 2016.

    A worker pushes boxes with food at a street market in Rio de Janeiro, Brazil, May 6, 2016. | Photo: Reuters

Published 21 May 2016
Opinion

The Temer government wants to reduce programs such as Bolsa Familia, potentially excluding a staggering 36 million people from the initiative. 

Brazil's coup government expects a record budget shortfall this year as a two-year recession drags down revenues, but policymakers vowed new austerity measures in the once-booming economy, Reuters report. 

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The federal government's primary budget deficit could reach a staggering 170.5 billion reais (US$48.7 billion) in 2016, or the equivalent of 2.75 percent of gross domestic product. Last year the government posted a record deficit of 1.94 percent of GDP.

The new shortfall estimate will be the administration's primary deficit target, which needs congressional approval before the end of the month to avoid a government shutdown.

Finance Minister Henrique Meirelles said the target could be reduced if Congress approves austerity measures to be proposed by the government in coming weeks.

He declined to detail the measures, but said they will help initially stabilize the growing debt burden and later reduce it to ease investors' fears over the country's financial health.

"We will work with a target lower than what we announced," Meirelles said in a press briefing. "This is a realistic and transparent target."

He did not rule out future tax hikes, but said the new measures will focus on better use of public funds.

Planning Minister Romero Juca, who also took part in the press conference, said he is confident Congress will approve the new fiscal target next week.

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Meanwhile, Brazil's ousted President Dilma Rousseff spoke out Friday on the situation in Brazil, saying the moves of the coup government are "regressive" and will ultimately hurt Brazil's poor.

The program currently offers assistance to 40 million people, of which 17 million are children. Rousseff branded the move "regressive."

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