By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – The Brazilian government’s economic team announced this week that they are asking Congress to approve an alteration of the Budget Law for 2016 which would allow the Union to close the year with a primary deficit of R$96.7 billion.
“In this scenario of retraction, we think it’s appropriate to change the fiscal target so that the government does not pull the economy further down… so we can help the economy to stabilize and that the growth of employment and income recover faster,” said Finance Minister Nelson Barbosa announcing the new request.
According to Barbosa the decision was made after the government observed the evolution of expenditures and the reduction of revenues. Barbosa stated that the increased primary deficit will allow the government to spend R$3 billion in prevention measures to combat the Zika virus in the country and R$9 billion in works of the Growth Acceleration Program (PAC) which have been halted.
Barbosa also noted that the primary deficit could increase by another R$6 billion if state governors accept the union-state debt renegotiation proposed by the Administration. If governors accept the proposal the primary deficit could go as high as R$102.7 billion.
The latest request by the Administration is much higher than what President Rousseff’s economic team was seeking in February, authorization for a primary deficit of R$60.2 billion.
Last year Brazil’s Congress approved a budget bill last year which called for a primary surplus of R$24 billion but due to the deterioration of the economic scenario and the steep decline in revenues the administration has revised its budget and now believes it will register a deficit in its primary results.