Brazil announces $17 billion in taxes, spending cuts

Global Business

Brazil announces $17 billion in taxes, spending cuts.00_01_34_19.Still002

Brazil’s government has announced drastic spending cuts and tax increases totaling 65 billion reais ($16.9 billion) on Monday to close a budget deficit that led to a downgrade of the country’s credit rating last week.

The measure is aimed at reverting an estimated budget deficit in 2016 in order to reach a surplus. Lucrecia Franco filed this report from Rio de Janeiro

Brazil announces $17 billion in taxes, spending cuts

Brazil announces $17 billion in taxes, spending cuts

Brazil’s government has announced drastic spending cuts and tax increases totaling 65 billion reais ($16.9 billion) on Monday to close a budget deficit that led to a downgrade of the country’s credit rating last week. The measure is aimed at reverting an estimated budget deficit in 2016 in order to reach a surplus. Lucrecia Franco filed this report from Rio de Janeiro.

More details:

  • The massive 17 billion dollar austerity package includes freezing civil servants’ salaries, eliminating 10 of 39 ministries, cutting housing and health-related social spending and worst of all: reintroducing an unpopular tax on every financial bank transaction.
  • The measure also includes slashing investments in infrastructure and agriculture subsidies to reach a budget surplus of 0.7 percent of GDP in 2016, instead of the 0.5 percent deficit initially estimated by the government.
  • If Brazil’s congress passes the austerity package, analysts say it will likely have a high political price for President Dilma Rousseff who has already had huge protests demanding her impeachment and blaming her for Brazil’s economic slump.