Brazilian President Michel Temer on Thursday unveiled a slew of stimulus measures to reduce the debt burden of businesses and consumers struggling with the country’s worst recession on record amid growing popular discontent.
Although limited in scope, the measures aim to appease Brazilians angry at the deepening recession in Latin America’s biggest economy and allegations of corruption against Temer and some of his closest allies.
“We are taking measures to pull the economy out of the recession,” Temer said in a briefing flanked by the head of the Senate and the Lower House. “Even during these turbulent times the government doesn’t stop.”
The government will write off some of the taxes owed by companies reporting losses and allow others to pay their debts in installments to expand their liquidity and improve their access to new credit.
Other microeconomic measures includes forcing banks and credit card companies to either reduce the time they take to process payments or lower the fees they charge businesses. The government will also stimulate long-term credit for real estate.
With the country’s finances in tatters, Temer has ruled out direct fiscal stimulus in his bid to ease the debt burden of Brazilians as the recession, now finishing its second year, forces droves of companies into bankruptcy and eliminates millions of jobs.
Finance Minister Henrique Meirelles said the government’s new measures to raise productivity will go in tandem with government efforts to rebalance the depleted public accounts.
The plan aims to lower the cost of doing business in Brazil, streamlining some taxes and cutting red tape to reduce the time it takes to open a new business or export and import goods.
Since Temer formally took office in August, he has faced pressure from business groups and political allies to swap austerity measures for policies aimed at jump-starting growth.
Economic activity fell 0.48 percent in October, the eighth drop in 10 months, official data showed earlier on Thursday, dashing hopes of an imminent recovery despite a jump in confidence after the impeachment of Temer’s leftist predecessor Dilma Rousseff.
The sluggish recovery and corruption allegations threaten to derail Temer’s austerity plan aimed at plugging a widening budget deficit that last year cost the once-booming Brazil its investment grade credit rating.
Temer’s own political survival is threatened by accusations that he, members of his cabinet and his party’s leaders, received under-the-table payments from engineering conglomerate Odebrecht.
Odebrecht, Brazil’s largest construction and engineering firm that prosecutors say benefited the most from a graft scheme at state-run oil company Petrobras, has signed a leniency deal that includes plea statements by dozens of executives and employees who are expected to implicate over 100 politicians.