Mauro Schneider, an economist at ING Barings in Sao Paulo, said that only two of 51 austerity measures, the income-tax increase and an increase in the tax on industrialized products, needed to be approved by Congress before the end of this year. Many other proposals can be put in place through presidential decrees, which can be extended indefinitely, as long as Congress doesn't vote the measures down. If market unrest persists, there was continued speculation among investors that Brazil might seek an accord with the International Monetary Fund. An IMF mission was set to arrive in Brazil next week, but both the government and the IMF said the team was coming to conduct its annual review of Brazil's financial situation, not to negotiate an emergency loan. Testy IMF Relationship Brazil's relationship with the IMF has at times been testy.
Some analysts say now is the time to mend fences.
The revenue gain isn't enormous, about 1.2 billion reals, but the tax plan is viewed as an important indicator of the country's willingness to swallow bitter economic medicine. Congress has suggested substituting the income-tax increase for an increase on the tax on checking transactions, an idea the government has rejected. Nevertheless, the president of the Congress, Antonio Carlos Magalhaes, has insisted that the income-tax hike has no chance of passing. We run things here. Many members of Congress still resent the government's failure to consult them before the hastily assembled fiscal package was released on Monday.