Brazilian President Dilma Rousseff is planning a package of budget cuts and tax increases worth as much as 100 billion reais ($36 billion) in an aggressive attempt to recover investor confidence at a time of growing strain on emerging markets, senior government officials told Reuters.
The fiscal adjustment, which is at the high end of market expectations, is the latest sign that Rousseff is adopting a significantly more austere and business-friendly agenda for her second term, which will start on Jan. 1.
It also comes as some of Brazil's peers are moving to shield themselves from falling commodities prices and a general loss of confidence in emerging markets. Russia's central bank hiked interest rates by 6.5 percentage points this week amid recent heavy declines in oil prices and its currency.
After a long boom last decade, Brazil's economy has averaged less than 2 percent annual growth, with high inflation, during Rousseff's first four years in office.
That mediocre record, along with disappointing tax collection, recent global instability, and falling prices for Brazil's commodities such as iron ore, convinced Rousseff to make a major policy change, the officials said on condition of anonymity.