MercoPress. South Atlantic News Agency

Austerity and tough spending cuts in Lula da Silva’s last two months

The outgoing president to help put the house in order

Brazil’s Lula da Silva could implement a series of austerity measures and spending cuts during the last two months of his presidential period in order to leave an easier scenario for president-elect Dilma Rousseff, reported Folha de Sao Paulo newspaper.

The Brazilian tabloid also indicated that both Lula da Silva and Rousseff had already discussed some fiscal adjustments that will help Rousseff's incoming administration to start a gradual hike of the interest rate.

Thus, Lula da Silva seeks to take some pressure away from Rousseff's shoulders as the recently elected Workers' Party member will have to face and deal with a very strong Real, sort out how to reduce one of the highest interest rates of the world, and cut the high-rated public spending.

The Brazilian newspaper also remarked that both Economy and Planning ministries are currently working together to establish the necessary cuts to be done.

Furthermore, the article reveals that both incoming and outgoing cabinets are holding talks with one clear goal: find the right measures to stop the Real from getting stronger.

Folha de Sao Paulo also emphasized that President Lula da Silva was already prepared to negotiate a more austere budget for 2011 with Congress.

According to the article, Lula da Silva would also be seeking to take advantage of his high popularity in order to reduce salary raises within the public sector, and to say no to the 56% hike that Brazilian Judiciary employees are currently demanding.