Home Administration Government announces change of fiscal target from 139 bln to 159 bln

Government announces change of fiscal target from 139 bln to 159 bln

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Change of the fiscal target rises by 20 billion reais loosely predicted in the government accounts for this year. Deficit stipulated for 2018 is also revised. After two adjournments, Finance Ministers Henrique Meirelles and Planning, Dyogo Oliveira, announced on Tuesday July 15 the revision of the fiscal target of the government, increasing to R$159 Billions of Reais (US$ 49,89 bln) the estimated deficit for 2017. The estimate of gap in the accounts for next year was also raised to R$ 159 billion Reais.

Originally, the deficit target was set at 139 billion reais for this year and at 129 billion reais for 2018. However, falling revenue and a series of revenue frustrations hindered compliance.

Among the difficulties faced by the federal coffers is the fact that the government was forced to withdraw from two measures that would raise revenues. The increase in the Social Integration Program and the Contribution for Social Security Financing (PIS / Cofins) on ethanol was partially reversed, reducing the collection forecast by 501 million reais.

With continuous deficits, Brazil runs the risk of being downgraded by risk rating agencies. For analysts, the revision of the fiscal target is a sign that Temer failed to restore government accounts.

To save himself from an admission by the lower house of criminal denunciation on suspicion of corruption, it is estimated that the president Temer has spent billions of reals in parliamentary amendments and funds destined for governments and city halls. Giving in to expensive bills by deputies and creating more jobs, Temer also threw a spade of lime into the fiscal adjustment policy promised early in the administration.

Also in relation to the Social Security reform, considered vital to heal the public accounts, the government made concessions. These are expected to cut planned tax savings by 25 percent in ten years and nearly 30 percent in 30 years, Meirelles said.