BRAZIL –Brazilian President Dilma Rousseff defended her government’s unpopular austerity measures as needed to restart growth in a televised address Sunday, while getting most of the blame for the economic woes in the nation on forces beyond her control.
Her management has sworn to replenish the coffers of the government in 2013, as Brazil faces the threat of a credit downgrade. The austerity effort was launched late last year, after Ms. Rousseff narrowly won a second term that started in January.
“The measures are meant to restructure our accounts and continue the process of development,” she said in the speech.
“You who are a housewife or the father of a family understand what this is… Sometimes we must rein in expenses to keep our budget from going out of control…to ensure our future,” she said. The speech was her first on national television since her Jan. 1 inauguration, it can be viewed outside Brazil by using a Brazilian proxy.
Finance Minister Joaquim Levy has declared tax increases and cost cutting measures–many of which need approval from Congress.
Some ruling coalition lawmakers and both opposition are becoming increasingly critical of the measures. Additionally, analysts are worried that Mr. Levy may not be able to fulfill his self-imposed fiscal goals.
The minister vowed to reach a primary surplus–a measure of authorities savings before interest payments–equal to 1.2% of gross domestic product. That will be a substantial improvement from last year, when Brazil had a 0.6% primary deficit, its first since 2001, when the central bank began to keep records.
The financial situation deteriorated as the government increased spending and cut taxes within recent years to help stimulate the market, analysts said. But the result was a prediction of growth that is negative in 2014–official results are due later this month–and above-target inflation.
Ms. Rousseff said the problems were the outcome of Brazil’s effort to ward off lingering effects of the 2008 financial disaster, namely slow increase in Europe and China, both top markets for Brazilian exports.
“The essential question is this: We have been in the 2nd round of the fight against the worst international crisis since the Great Depression,” she said.
But the country spending its way out of the crisis is not acceptable any longer, mostly because the state’s gigantic agricultural production has been hurt by a lengthy drought, she said.
“The circumstances have changed…we’re [also] facing the worst drought in our history,” she said.
She mostly discounted a corruption scandal surrounding Brazil’s largest state-controlled corporation, Petroleo Brasileiro SA, or Petrobras. In her 15-minute address, she simply said there’s an “considerable, free and rigorous investigation on the regrettable episodes against Petrobras.”
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