BRASILIA, (Reuters) – Brazil’s Congress yesterday upheld President Dilma Rousseff’s veto of a bill to raise judiciary employees’ wages, in a victory for the leftist leader as she tries to avert a fiscal meltdown and regain investors’ confidence.
The wage increases would have cost her government 36.2 billion reais ($9.5 billion) in extra expenditures until 2019, according to Finance Ministry data.
Keeping the veto gives a reprieve to Rousseff who is scrambling to shore up the country’s finances to avoid deepening what is expected to be the worst economic crisis since Brazil defeated hyperinflation in the early 1990s.
Still, her victory does not mean the leftist leader will have enough political support to pass a controversial fiscal savings package that calls for increased taxes and reduced public spending.
Widening budget gaps and surging debt levels led Standard & Poor’s to strip Brazil of its investment-grade rating in September. Policymakers are scrambling to prevent rival agencies from following suit to avoid a flight of capital from the once Wall Street darling.
Rousseff’s popularity is stuck at a three-decade low for a Brazilian president after a massive corruption investigation involving her Workers’ Party and other allies.
