Brazil’s 2017 Budget Bill Calls for Deficit of R$139.99 Billion

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Minutes after the ceremony that installed Michel Temer as Brazil’s new president, part of his economic team was already submitting to Congress the 2017 budget bill that includes some privatizations, limited spending and important structural reforms like in the country’s pension system.

Yet even with the forecast of an increase in revenues and overall expansion of the economy, the bill submitted on Thursday still calls for a very high end-of-year public accounts deficit, totaling R$139.99 billion.

“The budget is realistic, conservative. It takes into account the improvements that are taking place in the Brazilian economy,” Finance Minister Henrique Meirelles told journalists at the meeting with Senator Romero Jucá to submit the bill.

According to Minister Meirelles, the government plans to obtain billions of Brazilian reais (R$) in revenues from the privatization and sale of state and federal assets, and the concessions and permits in key infrastructure projects already next year. Among the privatizations expected to be pushed through next year are state-controlled Petrobras’ BR Distribuidora.

Nonetheless, the improvement and recovery of economic confidence seems to be the number one priority for the new administration. In his first televised speech as President of Brazil, Temer, stated that he was committed in ‘putting Brazil back on the right track’.

“We received the country facing a severe economic crisis: there are nearly 12 million unemployed people and more than R$170 billion in public accounts deficit. My commitment is to recover the strength of our economy and reestablish Brazil on its tracks,” said the President.

Temer also stated that one of this administration’s main focuses would be on the reform of Brazil’s public pension system. “To ensure the payment of pensions, we have to reform the social security system. Without the reform, in a few years the government will not be able to pay retirees. Our goal is to ensure a pension system where retirees are paid on time, with no caps and no tricks. A system which protects the elderly, without punishing the young,” the President told the nation.

Government officials forecast for 2017 a GDP growth of 1.6 percent, and an annual inflation of 4.8 percent.