Brazil gov't proposes raising 2018 minimum wage to $313

The Brazilian government proposed raising the minimum wage to $313 for next year. The value comes as part of the budget guidelines for 2018, presented Friday (Apr. 7) by Finance and Planning Ministers Henrique Meirelles and Dyogo Oliveira.

The minimum wage in Brazil today stands at $299. The economic staff followed current regulations, which stipulates that the adjustment should stick to the official inflation from the previous year, as measured by the National Consumer Price Index (IPCA) plus the change in the country's GDP from the two previous years.

Increase in the deficit

The bill on the budget guidelines rose from $25.2 billion to $41.2 billion primary deficit target for 2018 (the negative balance in government accounts before the payment of interest in the public debt). The new goal, the ministers argued, takes into consideration the reduction in tax collection stemming from the recession in 2015 and 2016, which is reflected in the government revenues with a certain delay.

“In 2018 we'll still suffer from a process of delay in revenues. The companies will still be accumulating fiscal credit from previous losses. The recovery of the economy in 2018 does not impact tax collection immediately. We'll still be seeing the effects of recession to a certain extant,” Oliveira declared.

According to the planning minister, despite the 2.5% in the GDP for next year, federal revenues still need time to improve. In 2019, he said, the government expects revenues to start recovering, but still not going back to 2011 levels, when tax collection stood at two percentage points of the GDP above the current level.

Translated by Fabrício Ferreira