By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – The interim government of brazil announced on Tuesday the first economic measures to try to improve the country’s ailing economy, by cutting down spending and reducing Brazil’s public debt. Finance Minister, Henrique Meirelles, said that one of the measures include the creation of a ceiling limit for the public spending whereas the spending of the year would not exceed the volume of the previous year plus inflation.
According to the Meirelles, this limit would allow for a better control of inflation and the reduction of the benchmark interest rates.
Other measures to be adopted by the eleven-day old government is the dissolution of the country’s sovereign wealth fund and the return of approximately R$100 billion in assets from Brazil’s development bank, BNDES to the country’s Treasury.
Meirelles stated the BNDES assets were idle at the institution and not affect the bank’s ability to disburse credit. The nearly R$2 billion in the sovereign wealth fund will be used to reduce the nation’s public debt, according to officials.
With rumors circulating in the last few days about possible increase or creation of new taxes, the Finance Minister emphasized that Brazil’s tax burden is already high. “It is important not to overburden society with more taxes,” he said during the press conference to announce the government’s first economic measures.
He added however that although the increase in taxes was not something being considered at the current moment, it was not all together rejected in the future, if these measures did not produce the desired results.
Hours after the announced economic measures, the Temer administration won its first legislative victory with Congress approving a plan which revises the fiscal target for 2016. The revised budget plan authorizes the federal government to close 2016 with a primary deficit of up to R$170.5 billion.