Crisis-hit Brazil announces spending cuts, tax hikes

Brazil has announced steep spending cuts and tax hikes in response to a deepening economic crisis that has already caused a shock downgrade of its credit rating. Planning Minister Nelson Barbosa told a news conference that the austerity package would total 64.9 billion reais (USD 17.03 billion). Major items in the package include freezing public sector salary raises and hiring; entirely eliminating 10 of 39 ministries; cutting 1,000 jobs and reducing housing and health-related social spending.

The downgrade last week by Standard & Poor's sent the government scrambling to prevent an exit of foreign capital and to balance the books in an economy already suffering from plummeting commodity prices and the effects of a huge corruption scandal. After a weekend huddled with ministers, pressure piled on President Dilma Rousseff. In this barbecue-mad nation of 200 million, her Finance Minister Joaquim Levy recently promised that the government would be "cutting into the meat" of federal spending, beyond just fat.

"These are major corrections, which involve government employees in a meaningful way and how the machinery of state works," Levy stressed. The government of Latin America's biggest country announced in August that the economy was officially in recession and that the contraction could extend through 2016, becoming the longest recession since 1931.