Brazil's Government Increases Budget Deficit and Announces Targets of R$ 159 Billion For 2017 and 2018

08/16/2017 - 11h15

After a week of clashes with the political wing of the government, the economic team announced this Tuesday (15) an increase in the deficit of the federal accounts in 2017 and the next three years. The government also warned that the expected turnaround for 2020, when it promised a budget surplus, will not happen.

With the review of the fiscal targets, forecasting a deficit of R$ 139 billion (US$ 43 billion) this year and R$ 129 billion (US$ 40 billion) in the next, the government now forecasts a deficit of R$ 159 billion (US$ 49 billion) in both years.

In 2019, the deficit target went from R$ 65 billion (US$ 20 billion) to R$ 139 billion (US$ 43 billion). The government expected a surplus of R$ 10 billion (US$ 3 billion) in 2020 and now forecasts a deficit of R$ 65 billion (US$ 20 billion).

The increase in the deficit will allow the government to unfreeze spending and avoid shutting down public services. To finance expenditures, it will be necessary to borrow funds, which will increase public debt.

The government also said that its forecast for the growth of the Brazilian economy next year fell from 2.5% to 2%, another factor that will contribute to reduce revenues. For this year, the official forecast continues at 0.5%.

Finance Minister Henrique Meirelles attributed the revision to the fall in inflation in recent months. "It's good news for the country and for economic activity, but it does change the expectation of collection", he said.

Translated by MARINA DELLA VALLE

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