Daily Times

BRASILIA: Brazil’s interim President Michel Temer said on Tuesday he would seek a constitutional amendment to curb public spending as his government unveiled a raft of austerity measures to plug a record fiscal deficit and regain investors’ confidence. Temer, a centrist who took over from leftist President Dilma Rousseff two weeks ago after she was suspended pending an impeachment trial, told congressional leaders that the amendment would limit growth in primary government spending before debt payments to the rate of inflation from the previous year. He said it would be the best way to bring down high interest rates and restore the country’s credit standing as it struggles with its deepest recession in decades. Brazil lost its coveted investment grade rating in December and the central bank’s benchmark interest rate is at 14.25 percent. Temer, the country’s former vice president, said a vote in Congress on Tuesday on the 2016 fiscal target was the first test for his new government as it tries to balance Brazil’s overdrawn accounts. The deficit is on track to top 10 percent of gross domestic product (GDP) for a second straight year. The government had reached agreement with the state development bank BNDES for the early repayment of 100 billion reais (19.15 billion pounds) owed to the Treasury, Temer added. His government is examining the legality of the BNDES move after Rousseff was put on trial by the Senate for boosting spending during her successful 2014 reelection campaign with money from the state bank. Temer said Brazil is studying the closure of its sovereign wealth fund and the creation of rigid technical rules for executives running pension funds and state companies. He said his government was also analysing whether the state-run oil company Petrobras must hold a stake in Brazil’s vast deepwater subsalt oil reserves. Finance Minister Henrique Meirelles said that a raft of economic reforms aim to guarantee the future solvency of the state.