President Dilma Rousseff is struggling to defuse an economic and political crisis that has prompted a selloff of Brazilian assets this year. Photo: AP
Brazil's Levy pitches budget cuts, tax hikes to end deficit
Brazil's Finance Minister, Joaquim Levy, has proposed a new round of
spending cuts and tax increases that are designed to close the budget
gap and protect the country from further credit downgrades.
The
government will reduce 26 billion reais ($US6.8 billion) in
expenditures from next year's budget, in large part by capping salaries
of civil servants and trimming social programs, Levy said. Brazil also
plans to raise 28 billion reais in revenue by boosting taxes, including a
levy on financial transactions.
"We know this
effort to cut spending will only take us so far, so as would happen in
any country in the world in a moment of reduced economic activity and
tax income, you have to seek out other resources," Levy told reporters.
"We're trying to find that balance."
The government
wants to post a budget surplus next year rather than a deficit as
previously forecast. Standard & Poor's cited the 2016 gap as a key
reason for cutting Brazil's sovereign-debt rating to junk last week.
The government plans to save 20.6 billion reais in
spending by cutting back on programs that provide sanitation, public
housing, technical training and national broadband. The annual wage
increase for some civil servants will come into effect in August rather
than January next year, saving 7 billion raise.
by: Carla Simoes and Anna Edgerton
by: Carla Simoes and Anna Edgerton
