A Brazilian government statement released on Wednesday announced a new $10 billion package to help revive the economy following a sharp fall in oil prices, including $5 billion to buy machinery and equipment for construction.
The announcement came after the government said it was suspending an agreement with Petrobras, the country’s biggest oil company, to buy up to $8 billion of oil and gas infrastructure in Brazil.
The new spending comes amid rising tensions over the future of Petrobrus gas pipeline project that has sparked widespread protests in Brazil and calls for a moratorium on the project.
“The budget includes a large investment in infrastructure that has been neglected and neglected by the current government,” said Dilma Rousseff, the president of Brazil, in a televised address.
“Today, this budget includes the most important investments in our country in its history.
We will use the funds for the necessary infrastructure.”
The new budget includes $2.5 billion in subsidies for construction, $500 million in subsidies to firms, and $250 million for training.
In addition, the government has announced an additional $10.5bn in tax cuts and other measures to help boost Brazil’s economy, which has shrunk by 3.5% in the past year.
Analysts say the $10-billion package will not be enough to reverse the recession, which is still grinding on.
“There are many factors that need to be balanced out in this budget,” said Gustavo Moraes, head of Brazil’s investment bank Banco Nacional de Asociados.
“There’s a lot of tax cuts, a lot more public investments, and there’s a massive increase in public spending.
But there’s also the cost of infrastructure.””
This will not make up for the losses incurred during the recession,” he said.
Brazil’s economy is expected to contract by 3% this year, its largest annual contraction since the Great Depression of the 1930s.
In December, the IMF warned that Brazil’s economic growth could contract by as much as 6.5%, a sign that the country is not recovering from the effects of the oil shock.