Jeferson Ribeiro and Brian Winter – Reuters, 08/10/2011
President Dilma Rousseff warned rebellious congressional allies on Wednesday not to pass new spending bills, telling them that tight budget control is the best way to ensure that Brazil’s economy avoids further damage from the global crisis.
Brazil’s financial markets have been hit especially hard by the recent volatility emanating from Europe and the United States. High inflation and a darkening economic growth outlook have led many investors, who are fleeing high-risk investments generally, to unload Brazilian assets even faster than those in other emerging markets.
Rousseff told a special meeting of legislators that Brazil’s economy could deteriorate even faster unless they keep a lid on annual salary increases for public servants and reject other proposals that could stoke inflation.