This move, while expected, will increase pressure on a nation that recently entered a recession, has an inflation rate around 10 percent and saw its unemployment rate recently hit 7.5 percent, a five-year high.
“Everything is really expensive now. One year ago, I would spend 200 reals (about $60) at the supermarket. Now I spend double,” Juliana Bueno, a Brazilian nutritionist who’s seen her income drop as clients cut back on visits and on spending, told CNBC. “It’s a really difficult situation, and I don’t see when it will end.”
The economic difficulties — exacerbated by construction of venues for last year’s World Cup and the Olympics — led harried Brazilian president Dilma Rousseff to submit a budget that had a built-in deficit of about $10 billion, “meaning she tossed to legislators the burden of figuring out where to make cuts,” the AP writes.
Rousseff is under further scrutiny because of a corruption scandal centered on the state-controlled oil company Petrobras, alleged incidents that occurred when she served as chair of the company’s board. Per the AP:
The scandal involves a decade-long kickback scheme that saw what prosecutors say was $2 billion in bribes paid to politically appointed executives at the state-run oil company Petrobras, who awarded Brazil’s top construction and engineering firms contracts whose final costs were wildly inflated.
CNBC reports that major companies involved in the preparations for the Games have been indicted over the scandal, meaning Olympic-venue construction could slow.
Rousseff’s approval rating hovers around a historically low 8 percent, with hundreds of thousands of Brazilians taking to the streets to call for her impeachment on Sunday.