Brazil Unveiling Austerity Package By MICHAEL ASTOR
BRASILIA, Brazil (AP) _ When a financial crisis in Asia threatened emerging markets worldwide last November, Brazil earned high marks for quickly announcing a package of austerity measures to shore up its ailing economy and protect its currency.
Few of those measures were ever put in place. Now with Brazil on the front lines of the global financial crisis, President Fernando Henrique Cardoso is preparing to unveil yet another package of tax increases and budget cuts.
The big question now is whether the latest package will fare better than the last.
``A lot of the measures that should be announced .... were supposed have been done a year ago,″ said Adalto Lima, an economist with Lloyds Bank.
While the full details will only be announced Wednesday by Finance Minister Pedro Malan, rumors about what the package will entail have been circulating in the local press for weeks.
According to these unconfirmed reports, the package should involve three basic items: a tax increase, spending cuts and structural reforms to social security and civil service.
The steps are seen shoring up investor confidence and making the country more eligible for an aid package from the International Monetary Fund.
Although none of the measures are likely to be popular _ a major reason why Cardoso held off announcing the plan until after Sunday’s runoff elections for governors in 13 states _ some economists think that the steps have more chance of passing then they did last year in the runup to an election.
Despite the delay in revealing the austerity measures, opposition governors won in several key races. Since governors in Brazil often hold greater influence over congressmen from their states than the president does, Cardoso may still have some difficulty getting his measures through the congress.
But the pressure remains high on Cardoso to follow through on his promises to get Brazil’s economy going again.
``In the past, Brazil got so many waivers (about not meeting established goals) from the IMF that Cardoso really has to shore up confidence or in the country or people won’t take it seriously anymore,″ said Walder de Gois, president of the Brazilian Institute of Political Studies.