RIO DE JANEIRO – Brazil’s acting president announced austerity measures Tuesday aimed at pulling Latin America’s largest economy from its worst crisis in decades, warning that a failure to act will mean “extraordinary hardship” for future generations.
Speaking with government leaders in a national televised meeting, interim President Michel Temer, 75, also banged his hand on the table while insisting he was up to the job.
Temer said the government would get an early repayment of about $28 billion from Brazil’s state-run investment bank BNDES and immediately abolish a fund created to channel oil revenues into education.
He also pledged to limit annual growth in government spending to the rate of inflation, currently around 10 per cent.
The most aggressive belt-tightening plans will depend on the Congress, and especially the Senate. Senators must vote in the coming months on whether to return suspended President Dilma Rousseff to office after an impeachment trial or permanently remove her. The latter would let Temer stay in the presidency through 2018.
Temer, who was vice-president, took over this month after Rousseff was impeached by the Senate for allegedly using accounting tricks in managing the federal budget. Rousseff has argued she did nothing wrong and promises to fight permanent removal at her upcoming trial.
Temer was vague about a timeline for introducing legislation on his “No. 1 priority” of reforming Brazil’s pension system. Last week, he appointed a commission to study and negotiate changes. However, two of the country’s largest unions have refused to participate, saying they don’t recognize his government.
“Further down the road, we will sentence the Brazilian people to an extraordinary hardship if we don’t act,” Temer said.
Brazil’s economy, an important engine for many South American nations, is expected to contract around 3 per cent this year after a fall of almost 4 per cent in 2015.
Temer faces huge challenges to getting reforms through Congress. While many lawmakers rallied around the idea of impeaching Rousseff, agreeing on thorny reforms will likely prove much more difficult.
In his first test with legislators, a divided Congress was still to vote on a new fiscal target for 2016, with a budget deficit of almost $48 billion. The previous figure under Rousseff was for a deficit of a little more than $27 billion. Lawmakers on both sides said there was a strong chance the vote would be postponed for next week.
“I have heard: ‘Temer is very frail, poor thing, he cannot govern. Nonsense!'” said Temer, whose normal mild manner has earned him the nickname “butler.” ”I was public security secretary twice in Sao Paulo and I had to deal with criminals. I know what to do in government.”
He said his administration has been a victim of “psychological aggression.”
As acting president for less than two weeks, Temer has come under mounting criticism on several fronts, from his decision to appoint a Cabinet of all white men to unpopular ideas floated by his finance minister, such as raising taxes.
Things got worse for the new administration Monday when Planning Minister Romero Juca took a leave of absence after a recording emerged in which Juca appears to be arguing that Rousseff had to be impeached to tamp down a sprawling investigation of a multibillion-dollar bribery and kickback scheme at state oil company Petrobras.
Since Temer took office, unions, artists, politicians and students have protested against him. An ally-turned-enemy of Rousseff’s, he is not popular. Opinion polls say many Brazilians would like to see him impeached, too. And the last time he faced the ballot box on his own, in 2006, he received the least votes among the candidates who won seats in the Chamber of Deputies.
Also on Tuesday, Temer recreated the Culture Ministry after strong criticism from artists like Grammy Award winner Caetano Veloso and Oscar nominee Fernanda Montengro over his decision to fold the Culture Ministry into the Education Ministry.
Temer has his work cut out for him in convincing average Brazilians that he can turn things around.
The IBOPE institute on Tuesday published a poll saying only 31 per cent of Brazilians reported being “optimistic” or “very optimistic” about Temer’s prospects, while 34 per cent said they were “pessimistic” or “very pessimistic” and 30 per cent reported feeling indifferent. Five per cent did not respond. The poll interviewed 2002 people between May 12 and May 16 and had a 2 percentage point margin of error.