On Tuesday President Dilma Rousseff announced a series of stimulus measures to kick-start the Brazilian economy. After a disappointing 2.7 percent GDP growth in the 2011 fiscal year, President Rousseff is hoping to reach at least 4.5 percent economic growth for the 2012 fiscal year.
The stimulus packet, worth about 60.4 billion reais ($33 billion), will include a mixture of fiscal incentives, including lowering payroll taxes for employers in hard-hit industries and increasing tariffs on products that have been gaining market space. Furthermore, the state-sponsored Brazilian Development Bank (BNDES), backed by a 45-billion reais ($24.5 billion) injection from the Treasury department, will increase its loans to subsidized companies in order to foster local production. According to President Rousseff, Brazil has to make use of its big and growing internal market, which also attracts great amounts of foreign investment.
These measures mark an important shift in strategy in President Rousseff’s administration. She came to power in the beginning of 2011 with an agenda ready for a country whose GDP had grown by 7.5 percent in 2010. The unexpected slowdown of the economy, however, has necessitated the adoption of fiscal measures to stimulate local businesses. Responding to criticism from the Brazilian congress over Rousseff’s management of the economy, former president Luiz Inácio “Lula” da Silva announced his full support of the Rousseff administration.