Suddenly Flush With Cash, Brazilians Can Help by Spending It All

[Judi Lynn]

by Bruce Douglas , Gabriel Shinohara , and Rachel Gamarski
March 10, 2017, 4:00 AM CST March 10, 2017, 8:39 AM CST

Temer stimulus frees up almost $10 billion from severance fund

Most Brazilians say they’ll save windfall. Maybe so, maybe not


Honeymoons on the Mediterranean aren’t the kind of investment that Brazil’s compulsory savings plan was set up to finance.

Employers have to pay a chunk of their workers’ salaries into the fund, and normally the employees wouldn’t be allowed to take anything out unless they’re fired, or get sick, or buy a house. But the government, desperate for some economic uplift, has suspended those rules. Starting today, Brazilians can dip into their accounts and spend the money however they like.'

So Sabrina Orlov, a newlywed 34-year-old publicist from Sao Paulo, is off to Israel and Jordan with her 30,000 reais ($9,500) windfall. “I’m very excited about it,” she said. “It came at a very good time.”

For Brazil’s economy, it’s been a terrible time. In 2016, it shrank 3.6 percent, the second straight year of grinding recession. And that’s the point. President Michel Temer has pledged to trim one of the world’s biggest budget deficits, so traditional stimulus isn’t an option. But Temer says that freeing up at least 30 billion reais from the savings fund could add half a percentage point to growth this year.

More:
https://www.bloomberg.com/news/articles/2017-03-10/loaded-with-cash-brazilians-are-urged-to-forget-about-austerity