By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – The R$69.9 billion budget cuts announced by Brazil’s government on Friday was received with mixed feelings by Congressional representatives, who are debating this week whether to authorize the fiscal adjustments requested by the Rousseff Administration. While some say that this is the only way to get the economy to start growing again, others argue that this latest move by the government will only further burden the Brazilian population and not resolve the problem.
“The [budget] cuts announced are one more facet of the recessive squeeze promoted by the PT (party), hurting the Brazilian population,” said former Presidential candidate and current PSDB Senator Aecio Neves in a press release after the announcement. “The R$70 billion announced today are only part of the bill Brazilians will have to pay due to the unlimited spending which has occurred during the last few years to win elections and maintain the PT [party] in power.”
For Senator Humberto Costa, leader of the PT party in the Senate, the cuts were necessary due to the current economic scenario. “[The cuts] were sufficient to signal to the market that the country will pay its bills, but not so large that it will compromise essential investments, especially in the areas of health and education,” he summarized.
Congressional representatives in favor of the cuts stated that the cuts were necessary so that the country will be able to contain inflation, reduce interest rates and promote sustainable economic growth. Critics in Congress, however, state that these cuts will significantly affect the PAC (Growth Acceleration Program) further hindering the government’s credibility with investors.
Market analysts point out that some of the criticism coming from the legislative body is due to the fact that some programs and bills introduced by Congressmen themselves will have budgets reduced or even scrapped altogether.
For Brazil’s Finance Minister, Joaquim Levy, the size of the cuts is ‘adequate’. “We need a more balanced situation,” he told reporters Monday morning outside the Ministry building.
“What we have this year [does not generate] revenues.” According to Minister Levy if the government is able to push through the fiscal adjustments the economy may start showing signs of recovery.