World Economy

Brazil’s president takes steps on austerity

Simon Romero

President Dilma Rousseff of Brazil announced Friday that she was cutting her salary by 10 percent, reducing the size of her cabinet and slashing thousands of coveted jobs for political appointees in an effort to build support for broader austerity measures as she grapples with calls for her ouster.

Dilma Rousseff, president of Brazil
Ueslei Marcelino | Reuters

The moves by the beleaguered leader, which reduce the number of cabinet ministries to 31 from 39 and extend the pay cut to the vice president, Michel Temer, and all of her ministers, reflect how Ms. Rousseff is scrambling to reassemble a fragmented coalition as her governing Workers Party reels from a bribery scandal involving Petrobras, the national oil company.

Economists contend that Ms. Rousseff's actions will result in largely symbolic savings, because Brazil's budget deficit has ballooned amid a severe economic crisis. After the pay cut, her salary will be about $90,000 a year. Other presidents in the region have pursued similar reductions, with President Evo Morales of Bolivia cutting his salary in half after taking office in 2006.

With Ms. Rousseff facing dismal approval ratings and calls for impeachment, the overhaul might buy her some time to rebuild influence, political analysts said. Behind the scenes of the shuffle, her powerful predecessor, Luiz Inácio Lula da Silva, is reasserting his sway by placing a confidant, Jaques Wagner, as Ms. Rousseff's chief of staff. At the same time, the centrist Brazilian Democratic Movement Party, which controls both houses of Congress, is boosting its own power by now occupying seven ministries, up from six.

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The party, a pillar of Ms. Rousseff's frayed coalition, is "110 percent satisfied" with the changes, Kátia Abreu, the conservative minister of agriculture, told reporters. "There's even some fat left," she added, emphasizing that more cuts could be made.

By ceding more power to the party, called the P.M.D.B., Ms. Rousseff is seeking to build support in Congress for the approval of contentious spending cuts sought by her finance minister, Joaquim Levy. Leaders of the P.M.D.B., which is also grappling with fallout from the Petrobras scandal, have tried to obstruct austerity measures on several occasions this year.

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Ms. Rousseff's standing in Brasília, the capital, may have also been strengthened after Eduardo Cunha, the conservative House speaker and a leading critic of her government, found himself on the defensive this week after Swiss officials confirmed the existence of secret bank accounts controlled by Mr. Cunha.

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Mr. Cunha, a leading figure in the P.M.D.B., is battling accusations that he accepted as much as $40 million in bribes for himself and his allies. While Mr. Cunha has rejected calls for his resignation, he has the power as House speaker to decide on requests to start impeachment proceedings against Ms. Rousseff. Mr. Cunha declined to comment on the reports of his Swiss accounts on Friday.