After the recent close re-election of President Dilma Rousseff, both Rousseff and the Brazillian government are rejecting the idea of an economic stiumulus, depsite the current struggles in both industry and finances. Instead of attempting to stimulate the Brazillian economy, Rousseff has stated that she plans to focus on rebuilding damaged ties with investors that have been burned in past selective stimulus plans. These plans, which attempted to revive the economy by reducing taxes and increasing subsidies, have fueled inflation and led to the increase in the current budget deficict. Rousseff's new plan for mending Brazil's economy is consisted of cracking down on inflation and cutting down on expenditures to improve the country's primary budget balance in order to avoid ending in a deficit, as well as lowering its key fiscal savings target for next year.
The main problem is that global ratings agencies have threatened to downgrade Brazil's credit rating if the government doesn't correct the current rate of inflation. The current high rate of inflation has many worried about the future financial health of Brazil, which has led to the frayed relationship between Brazil and both domestic and foreign investors. There's an old joke that says "they call Brazil the 'country of the future', because it always will be," but President Rousseff is doing everything in her power to avoid a such a fate for Brazil. Unforunately, fiscal experts doubt the government will be able to achieve these goals without serious increased taxes on gasoline and other industrial products.
Sources:
http://www.chicagotribune.com/sns-wp-blm-news-bc-brazil-econ27-20141027-story.html#page=2
http://www.reuters.com/article/2014/11/07/us-brazil-economy-measures-idUSKBN0IR21Y20141107
The main problem is that global ratings agencies have threatened to downgrade Brazil's credit rating if the government doesn't correct the current rate of inflation. The current high rate of inflation has many worried about the future financial health of Brazil, which has led to the frayed relationship between Brazil and both domestic and foreign investors. There's an old joke that says "they call Brazil the 'country of the future', because it always will be," but President Rousseff is doing everything in her power to avoid a such a fate for Brazil. Unforunately, fiscal experts doubt the government will be able to achieve these goals without serious increased taxes on gasoline and other industrial products.
Sources:
http://www.chicagotribune.com/sns-wp-blm-news-bc-brazil-econ27-20141027-story.html#page=2
http://www.reuters.com/article/2014/11/07/us-brazil-economy-measures-idUSKBN0IR21Y20141107
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