The Brazilian government’s proposed spending cuts and tax hikes are unlikely to receive the congressional approval that most need to be enacted, a leading political risk firm said Tuesday.
The Eurasia Group said in a statement that Brazil’s Congress will likely reject most of the measures, “prompting the government to seek other sources of revenue that don’t require congressional approval.”
Finance Minister Joaquim Levy on Monday announced nearly $7 billion in spending cuts and measures to raise tax revenue by some $10 billion to help balance public finances and win back the support of investors and the business community.
The measures are also aimed at covering an $8 billion shortfall in the 2016 budget.
Joaquim Levy says the cuts are to include large-scale infrastructure projects initially aimed at stimulating the South American giant’s now-stalling economy. Other savings will come from personnel cuts within Cabinet ministry staff, as well as other cuts to Brazil’s bloated public sector.