Brazil’s Government To Announce Plans To Curb Spending And Slash Debt, Finance Minister Says

Brazil’s government is expected to unveil a series of measures and spending cuts this week to reduce the nation’s debt burden and fix its gaping fiscal deficit.

Henrique Meirelles, Brazil’s newly appointed finance minister, said Monday the short- and long-term measures will be designed to regain investors’ confidence and help pull Brazil out of its worst recession in nearly a century, Reuters reported.

Interim President Michel Temer named Meirelles, a former central bank governor, to lead the finance ministry earlier this month as part of a broader effort to attract businesses and salvage Latin America’s largest economy. Temer took over from suspended President Dilma Rousseff in early May after Brazil’s Senate voted to put her on trial for impeachment amid corruption allegations.

Meirelles, who spoke Monday at an economic forum in São Paulo, is one of Brazil’s most accomplished financial officials. As central bank chief from 2003 to 2010, he slashed inflation and oversaw an acclaimed period of growth and stability. “In many ways he is what Brazil needs,” Edwin Gutierrez, head of Emerging Market Sovereign Debt at Aberdeen Asset Management, told Bloomberg this month. “He is a politician; he knows how to work in Brasilia,” the capital of Brazil.

Still, yet another corruption scandal in Brazil could overshadow any new policy announcement this week, Reuters reported. Romero Juca, the planning minister and a key member of Meirelles’ new economic team, has been accused of seeking to stall an investigation into a massive corruption scandal at state-controlled firms.

Juca has been negotiating with Congress for the approval of a new primary deficit target to avoid a government shutdown in June. The Temer-led government this week is expected to hand Congress a deficit target of 170.5 billion reais (about $48 billion) for 2016 — roughly 2.75 percent of Brazil’s gross domestic production.