Brazil’s Congress Leaders Agree to Back Rousseff’s Economic Plan

Party leaders in Brazil’s ruling coalition signed an agreement to back the government’s plan to narrow the budget deficit after Vice President Michel Temer took over negotiations with lawmakers.

The leaders will back the proposals presented to Congress by President Dilma Rousseff’s government, according to a copy of the pact. They also vowed to avoid bills that reduce revenues or increase spending.

The accord is “an important sign that shows Temer’s involvement helped overcome the worst of the crisis in the government coalition,” Rafael Cortez, a political analyst with Tendencias Consultoria, said by phone from Sao Paulo. “But there’s still a long road for the government to approve the fiscal package and avoid other measures that wind up compromising the country’s fiscal issue.”

Rousseff needs support from her allies, including Temer’s Brazilian Democratic Movement Party, or PMDB, to win congressional approval of two proposals worth about 23 billion reais ($7.3 billion) in tax increases and social benefit cuts. That’s equivalent to about 35 percent of this year’s fiscal target.

Temer, who is also the party chief of Rousseff’s biggest coalition partner, took over the responsibilities of the dismantled Institutional Relations Office, according to a statement e-mailed by the presidency’s press office Tuesday.

The real has weakened the most among major currencies this year as Rousseff attempts to implement economic measures that seek to narrow the widest budget deficit in more than 15 years.

The ruling Workers’ Party had its first major political defeat of Rousseff’s second term Feb. 1 when its candidate to lead the lower house of Congress lost to Eduardo Cunha, a PMDB member. Cunha won using the slogan “Independent Lower House,” in a message directed at the president.

The head of the Senate, Renan Calheiros, has also been at the center of defeats for the government. Also a PMDB member, he rejected a presidential decree that could fast-track an increase in taxes, forcing the government to present a bill that would take longer to approve.

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