Updated 01:34 PM EDT, Sun, Sep 22, 2019

How the Brazilian Government Plans to Save the Country from Recession

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Brazil has an ambitious plan of reviving its stagnant economy. Last year was a terrible year for Brazil with the widespread corruption scandal that threatened President Dilma Rousseff's political future. Now, Rousseff and her administration hope to alleviate the economic situation in the country.

Brazil is currently in its worst economic downturn it has seen since the 1930s. According to the International Monetary Fund, Brazil's economy is expected to shrink by as much as 3.5 percent. Low commodity prices and people's disillusionment in Brazil's government has only added fuel to the fire. But this time, President Dilma Rousseff and her administration hope to have come up with a solution to help with the country's economic woes.

Wall Street Journal reported that President Dilma Rousseff plans to bet 83 billion reais at interest rates set by Banco do Brasil, Caixa Economica Federal and state development bank BNDES. These loans, they said, would be made available to small Brazilian companies who want to recover in their finances, homeowners, and farmers.

Brazil's central bank also said that oil prices that have taken a downturn is one of the main hindrances of global economic growth. They did say, however, that they are determined to stave inflation.

The plan is an ambitious one, many analysts have said. Dilma's critics fear that this might rekindle worries in the country. But Brazil Finance Minister Nelson Barbosa said that it won't present itself as an additional burden to taxpayers because the rates will not be subsidized.

The Fiscal Times said that the central bank thinks that the government's plan to bolster credit would ultimately complicate the country's battle against inflation, something that they want to avoid.

Barbosa declared that Brazil has to "restart economic growth." He insisted that this would not jeopardize the fight against inflation because of "resources that are already in the financial system."

Brazil announced on Thursday that the country had a budget deficit of 115 billion reais last year. This was notably Brazi's largest reported shortfall since the recession began.

On her part, Rousseff is still trying to start strong in 2016, despite massive pressure coming from all parts, including the Zika virus, which has badly struck Brazil and is threatening tourism in the country -- one of its largest sources of income.

She added that reform is one of her chief agendas this year and that she is determined to work with Brazil's Congress to approve a new tax on financial transactions.

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