In a significant win for President Dilma Rousseff, Brazil’s Senate on Wednesday approved a bill to roll back payroll tax breaks.
The move is aimed at reducing a gaping fiscal deficit. Brazilian Finance Minister Joaquim Levy said the bill is crucial to averting a credit downgrade to junk.
The lower house had passed it with no changes.
The Senate voted 45-27 to pass the bill on Wednesday.
Rousseff will now sign it into law.
This was the final major piece of legislation in Rousseff’s fiscal austerity plan.
Rousseff and her economic team are trying to convince lawmakers to curtail government spending and raise revenue to shrink the budget deficit and stave off a credit downgrade.
Yet her record-low approval rating and disagreements in the ruling coalition are making it difficult for the administration to win approval of its fiscal-austerity agenda.
After almost a year of interest rate increases, higher taxes and spending cuts, Brazil’s economy will shrink this year and next, constituting the longest recession since 1931, a central bank survey of economists shows.
Finance Minister Levy disagrees. On Wednesday in Brasilia, Levy said Brazil’s recession will be over in 2016.
“Most of the adjustments have already been done. The Central Bank is controlling inflation. The Brazilian economy is diversified, agriculture is doing very well. We will not have recession and inflation should fall in 2015,” he told a TV network.
He also refuted reports that have said President Rousseff will step down following impeachment campaigns by opposition supported groups.
“Anyone betting on her resigning will lose, because Dilma is strong. She faces up and does what needs to be done,” Levy said.
TBP and Agencies