Deficit plan OK’d

Brazil’s congress early Wednesday approved a deficit spending plan, as the country’s new leader seeks to cement his authority following the suspension of president Dilma Rousseff.

The government of Interim President Michel Temer says Brazil is facing a record 170.5 billion reais ($48 billion) primary budget deficit in 2016, far higher than Rousseff’s earlier fiscal target of a 97 billion reais deficit.

The new deficit figure reflects what the economy team says is the significantly worse financial picture uncovered after Rousseff’s departure.

The primary deficit, a key indicator for creditors, measures the difference between government spending and revenue, excluding interest payments on debt.

To try and balance the books, Temer has proposed austerity measures and bringing efficiency to the bloated government.

While lawmaker Dagoberto Nogueira praised the move authorizing a deficit increase, Communist Party lawmaker Jandira Feghali was unimpressed. “We’re giving the government a blank check,” she said.

The joint lower house-senate session lasted 16 hours, ending in the pre-dawn hours of Wednesday.

Latin America’s strongest economy is forecast to end 2016 in the red for a third year in a row, while it is enduring the worst recession in a century.

At a meeting with ministers and congressional allies in the capital, Brasilia, on Tuesday, Temer said that restoring economic growth will require strong medicine.

“I want to emphasize that it won’t be 12 days or two months that will pull Brazil out of crisis,” Temer warned on Tuesday, as he presented his austerity measures to lawmakers.

Other Temer economic proposals include possibly cashing in a sovereign wealth fund and considering asking the state development bank BNDES to repay about $28 billion in debt owed to the government. (AFP)