Brazil’s government announced spending cuts and tax increases totaling 65 billion reais ($16.9 billion) on Monday as it races to close a budget deficit that led to a downgrade of the country’s credit rating last week.
The biggest item was the revival of the unpopular CPMF tax on financial transactions that will raise 32 billion reais next year if it passes a Congress opposed to new taxation.
The drastic spending cuts hit health and low-cost housing programs, investments in infrastructure, agricultural subsidies as well as salaries and bonuses for government employees.
The government reduced tax subsidies for the chemical industry, cut refunds to exporters of manufactured goods by 2 billion reais and raised the capital gains tax to up to 30 percent to bring in 1.8 billion reais in new revenue.
The measures are meant to bridge a shortfall of 30 billion reais in the 2016 budget that President Dilma Rousseff sent to Congress last month and reach a budget surplus of 0.7 percent of GDP before interest payments.
Brazil Energy Insight 
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