- Title: Temer says wants to 'vaccinate' Brazil against fiscal populism
- Date: 30th September 2016
- Summary: SAO PAULO, BRAZIL (SEPTEMBER 30, 2016) (REUTERS) BRAZILIAN PRESIDENT MICHEL TEMER APPROACHING PODIUM GENERAL VIEW OF TEMER AT PODIUM CLOSE-UP OF TEMER TEMER AT PODIUM GENERAL VIEW OF STAGE (SOUNDBITE) (Portuguese) BRAZILIAN PRESIDENT MICHEL TEMER SAYING: "The crisis that we are facing is the most serious of our history. I don't want to scare you with that. I just want to motivate you so we can, together, escape this crisis. The (crisis') root is essentially internal and mainly it's a tax crisis. The state has run into debt far beyond its capacity and, in doing so, we have produced intense recession and unemployment. Now, we need to balance ourselves again, settle accounts, and put Brazil again on the rails." GENERAL VIEW OF TEMER SPEAKING AUDIENCE MAN TAKING PHOTO IN AUDIENCE (SOUNDBITE) (Portuguese) BRAZILIAN PRESIDENT MICHEL TEMER SAYING: "I mentioned that we need to immunize ourselves against fiscal populism and it is precisely about that, ladies and gentlemen, the proposal of constitutional amendment No. 241 deals with, what we call the proposal of ceiling of public spending. The approval of this project is essential to avoid an inflationary spiral and a deeper recession. Just to give you an idea, if this proposal is not approved, the debt could reach 100 percent of GDP in 2024." TEMER LEAVING THE STAGE
- Embargoed: 15th October 2016 17:15
- Keywords: Michel Temer Dilma Rousseff fiscal populism public spending Brazilian Congress
- Location: SAO PAULO, BRAZIL
- City: SAO PAULO, BRAZIL
- Country: Brazil
- Topics: Budget/Taxation/Revenue,Government/Politics
- Reuters ID: LVA00151REN9F
- Aspect Ratio: 16:9
- Story Text: Brazilian President Michel Temer said on Friday (September 30) he wants to "vaccinate" the country against "fiscal populism" with constitutional reform limiting increases in public spending that he expects to be approved by Congress.
Temer said without the constitutional reform, Brazil's public debt could reach 100 percent of gross domestic product (GDP) by 2024, and he appealed to business leaders and the media to campaign in favor of its approval.
"I mentioned that we need to immunize ourselves against fiscal populism and it is precisely about that, ladies and gentlemen, the proposal of constitutional amendment No. 241 deals with, what we call the proposal of ceiling of public spending. The approval of this project is essential to avoid an inflationary spiral and a deeper recession. Just to give you an idea, if this proposal is not approved, the debt could reach 100 percent of GDP in 2024," he said.
The flagship reform, which would limit increases in public spending to below the inflation rate of the previous year, will face its first hurdle in a special commission of the lower house next week.
The measure could receive final Congressional approval before the end of October, but investors who have snapped up Brazilian assets on hopes of market-friendly reforms are nervously eying proposals to water down its impact in coming years.
In a reminder of the enormous budgetary challenge facing Latin America's largest economy, which lost its coveted investment grade rating last year, data on Friday showed Brazil's primary budget deficit hit a record 22.267 billion reais ($6.88 billion) in August, well above market expectations.
"The crisis that we are facing is the most serious of our history. I don't want to scare you with that. I just want to motivate you so we can, together, escape this crisis. The (crisis') root is essentially internal and mainly it's a tax crisis. The state has run into debt far beyond its capacity and, in doing so, we have produced intense recession and unemployment. Now, we need to balance ourselves again, settle accounts, and put Brazil again on the rails," Temer told a business forum in Sao Paulo.
While economists say Brazil's $2 trillion economy could emerge from its worst recession in decades in the final quarter of this year, unemployment in Latin America's largest country is expected to continue rising.
Data from statistics agency IBGE showed on Friday the unemployment rate rose to 11.8 percent in the three months through August, slightly above expectations in a Reuters poll.
Rousseff's Workers Party, which ruled Brazil for 13 years until she was impeached by Congress last month on charges of breaking budget rules, has accused Temer's government of planning to scrap welfare programs that dragged millions of people out of poverty during the previous decade.
Temer said that, given the situation in the country, his center-right government would combine budgetary and social responsibility.
He said that, with considerable social needs in Brazil, the state had an important role to play in the economy, but one that also recognized the importance of the private sector. - Copyright Holder: REUTERS
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