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World

Brazil's poorest regions face a spending freeze

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World

Brazil's poorest regions face a spending freeze

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COMING UP:Brazil's poorest regions face a spending freeze

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Transcript

00:00:01
>> As Brazil's economy sinks further into its deepest recession in eight years, the country's congress is gearing up to pass austerity measures that could crush its poorest citizens. President Michel Temer who was still getting his feet wet after the ouster of Dilma Rousseff has proposed a 20-year long limit to federal spending.
00:00:22
And that could hit places like here in Salgado the hardest. Reuter's correspondent Silvio Cascione is in Brasilia.>> The government is the main source of jobs in the northeastern town of Salgado, Pernambuco. Our reporter Leonardo Boyd went there and saw idle construction sites and closed shops. The mayor said 40% of the population is living on a monthly payment made by the federal government to people in extreme poverty.
00:00:46
President Michel Temer has no plans to cut the welfare program, but he is considering other measures besides the federal spending cap. These measures would include a pension reform and asset sales. His idea is to reduce the role of the state in the Brazilian economy and cut expenditures.>> Tax hikes have been nixed as Brazilians already pay 33% in taxes, the highest rate in Latin America.
00:01:12
So the federal government is looking to privatize utilities in some areas, and grant mining rights to private companies. Such projects could generate money but much further down the road.>> The crisis has left 12 million unemployed and helped consolidate support for the impeachment of President Dilma Rousseff this year.
00:01:30
A Reuter's poll has predicted the economy to resume growth next year, but it should only return to its pre-crisis levels in 2019.>> Meanwhile, in the back country of Salgado, where a five-year long drought has left the land too scorched for farming, and where there are no mines to be explored, the future looks bleak.