President Dilma Rousseff said here Thursday that Brazil's economic woes are cyclical in nature that the austerity measures her administration has adopted to rectify the situation will begin to bear fruit late this year.
We're going through a time of cyclical difficulties but we're a country with a solid foundation, the head of state said at the inauguration of a project to expand and modernize the Port of Rio de Janeiro.
Rousseff, who again refused to characterize Brazil's current situation as a crisis, defended her austerity program in the face of criticism from the opposition and some government allies.
Brazil's economy is stagnant and may contract 0.7% this year, according to the latest forecasts, while the country's federal, state and local governments ended 2014 with a cumulative primary budget deficit (before interest payments) equivalent to 12.51 billion, putting public finances in the red for the first time since the current reporting methodology was adopted in 2001.
Inflation rose to 7.7% last year, its highest level in a decade, and unemployment also has begun to grow in recent months.
To combat these problems, the government unveiled a series of austerity measures, including spending cuts, the paring back of tax breaks, tighter credit, and a reduction in labor benefits, that have sparked criticism, even from labor unions and other allies of Rousseff on the left.
The president has attributed the country's problems to the global financial crisis that erupted in 2008 and said the counter-cyclical measures the government had adopted until now, mainly state-subsidized credit and tax breaks, prevented the sharp rise in unemployment and violent slowdown in growth seen over the past six-and-a-half years in other countries.
She added that the higher spending and lower tax take created problems in the public accounts and government's budget, but that otherwise society and workers would have borne the full brunt of the crisis.
At present, due to the budget deficit, Brazil needs other tools to tackle the crisis and prevent structural and permanent high unemployment and slow growth, Rousseff said.
We're doing what everyone does when you have problems at home. We're readjusting our accounts to keep growing and we think that will happen in the coming months, toward the end of the year, the president added.
Rousseff said business leaders know the difficulties are temporary and the best proof is that they continue to invest.
No business owner invests so much in a large project like this without studying demand and knowing if the country has a future or not, Rousseff said, referring to the 1.5-billion-Real (500 million dollars) Rio port expansion.