Brazil’s looser targets open the way for seven years of budget deficits
Wider budget targets delay the prospect of a drop in the federal deficit after legislators refuse to raise taxes in the recession-hit economy
Brasilia — Brazil’s government loosened its budget targets for all years to the end of 2020 on Tuesday, delaying the prospect of a drop in the federal deficit after legislators repeatedly refused to raise taxes in the recession-hit economy. Cost-cutting measures were announced along with the new targets, in a bid to demonstrate President Michel Temer’s commitment to fiscal discipline even after his economic team cut forecasts for economic growth for 2018. The revision, announced weeks earlier than expected, underscored the uphill battle for Temer to gather support for austerity measures as a corruption scandal simmers and the 2018 general elections approach. Market reaction was muted as investors did not expect a surge in government spending despite the new targets. Ratings agency S&P Global Ratings spared Brazil from a downgrade, saying after the announcement that it would maintain the country’s debt rating at BB with a negative outlook. Brazil’s government set a new primary defici...
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