BRASILIA - Brazil’s government is expected to announce another round of budget freezes on Wednesday, raising the risk of pushing the country’s already weak economy closer to recession and adding to political pressure on President Jair Bolsonaro.
The government is also expected to cut its 2019 growth forecast on Wednesday to 1.6% from 2.2%, underscoring concerns about Brazil’s economy after what is likely to be a first-quarter contraction. Approval ratings have been sliding for the former Army captain, who was elected on a law-and-order anti-corruption platform, since Bolsonaro became president on Jan. 1, in large part due to a lack of progress on the economy.
Treasury Secretary Mansueto Almeida has acknowledged that public investment is getting to “critical” levels. But in an interview with Reuters last month, he said spending must be brought under control even if it harms the economy in the near term. “It is widely recognized that public investment has higher multipliers than most government expenditures, so cutting public investment has a more severe impact on economic growth,” Orair said. “It is not a good path to follow.”