Congress approves government's 2015 fiscal target revision

The National Congress passed a law Wednesday (Dec. 2) revising the 2015 fiscal target. Rather than a $17.2 billion surplus, the government budget will close out the year at a $30.8 deficit. The Congress decision is seen as a critical measure to help the government meet the requirements of the Fiscal Accountability Act.

Finance Minister Joaquim Levy said the measure will also allow the country to move back into normalcy ahead of the challenge of averting further economic damage in 2016 by securing a budget that allows the government to meet its target for the primary surplus (savings to pay interest on public debt) of 0.7% of GDP. He also advocated discussing the reform in the pension system, which concentrates the bulk of the mandatory government costs.

“We [still] have to approve the LDO [the legal budget guidelines for 2016], we have to approve the budget and the related sustaining measures, both in terms of expenditure and in terms of revenue. In fact, there are crucial long-term implications, for the pension reform for example, which will pave the way for intergenerational stability,” he said.

The minister declined to comment on the decision of the Speaker of the Chamber of Deputies, Eduardo Cunha, to begin the impeachment proceedings against President Dilma Rousseff. “That is not an economy topic,” he merely said.

Public banks
On Twitter, the Minister of Planning, Budget and Management, Nelson Barbosa, said the approval of the new fiscal target solves the issue of the public bank transfer deferrals.

Once it has been sanctioned by the president, the minister added, the government can proceed to issue a new decree revoking the $2.7 billion freeze on the budget passed earlier this week. The government was compelled to impose further budget cuts because of a delay in voting on the fiscal target revision, which was supposed to have taken place by November 30.

According to him, the fiscal target revision will help avoid further budget cuts beyond economic feasibility. He credited the government difficulties meeting the previous $17.2 billion surplus target to the economic downturn which knocked down the government's revenues this year.

Translated by Mayra Borges

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