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Brazilian Government Registers First Deficit in Current Accounts Since 1997

01/30/2015 - 08h54

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FROM BRASÍLIA

President Dilma Rousseff closed the last year of her first mandate with an unforeseen debt in the Treasury.

The government's expenditure with staff, social programs, funding and investments were larger than the revenue in 2014, totalling US$6.56 billion.

The political calendar was a factor that pushed the expenditure up, reaching US$397 billion; tax collection, which was jeopardized by the frailty of the economy as well as by measures of tax relief, closed at US$390 billion.

The Brazilian government had to borrow money in order to pay for its commitments as well as infrastructure works.

This is the first debt of its kind to be scrutinized by the Treasury since the Real Plan, launched in 1994. Before that, hyperinflation eroded expenditure figures and helped to balance out the national budget.

The deterioration of public accounts started in 2009 when the Lula government dealt with the global financial crisis by increasing expenditure, cutting taxes and increasing borrowing from public banks.

Reelected, Ms Rousseff has declared that the strategy - whose consequences include rising inflation and debt in external accounts - has reached its limit.

This is a threat to the expansion of expenditure on pensions, social benefits like 'Bolsa Familia', housing benefits such as 'Minha Casa, Minha Vida' and investments in infrastructure.

The new economic department have announced rising taxes, cuts to investments and restrictions to benefits such as pensions, unemployment benefit and allowances.

Even then, doubts still remain, regarding the promise of saving US$21.2 billion this year to keep public debt under control.

Translated by CRISTIANE COSTA LIMA

Read the article in the original language

Alejandro Bolívar/Efe
President Dilma Rousseff closed the last year of her first mandate with an unforeseen debt in the Treasury
President Dilma Rousseff closed the last year of her first mandate with an unforeseen debt in the Treasury

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