President Temer Considers Cutting Expenses to Control Massive Deficit

08/11/2017 - 12h17

In addition to increasing fiscal deficit targets for 2017 and 2018, the Brazilian government estimates it needs to generate new revenues and cut at least R$ 10 billion (US$ 3.1 billion) in expenses with civil servants and PAC (Growth Acceleration Program) projects, to tackle its deficit.

The economic area has found the estimated shortfall is greater than R$ 159 billion (US$ 50 billion), amount that should be announced on Monday (14) as target for next year.

The government expected to collect R$ 13 billion (US$ 4.09 billion) with Refis (a tax payment program), but now it intends to negotiate a new strategy to generate at least R$ 10 billion (US$ 3.1 billion).

The actual gap for 2018 is also is estimated at roughly R$ 170 billion (US$ 53.5 billion), but the government wants to limit such deficit to R$ 159 billion (US$ 50 billion).

The idea is to cut expenses to meet this goal, and, with new revenues, attempt to reduce the figure to R$149 billion (US$ 46.9 billion) or less. That would indicate to the market that there is a plan to tackle the deficit.

Postponing salary adjustments of specific categories of civil servants to 2019 is among the measures under consideration, which could save R$ 9 billion (US$ 2.8 billion).

Additionally, the government wants to approve a proposal of compliance with the wage ceiling for public services and put an end to reclusion aid.

The tax increase, however, requires approval from the Legislative Branch, which has been struggling to avoid the burden of unpopular measures in view of upcoming elections.

Translated by ANA BEATRIZ DEMARIA

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	Apu Gomes/AFP
	Brazilian President Michel Temer attends the opening ceremony of Brazil's National Foreign Trade Meeting, in Rio de Janeiro