BRAZIL POLITICS: Temer to Raise Taxes, Freeze Spending

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By Politicoscope July 21, 2017 00:00

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Brazil’s’s renewed austerity effort is justified by President Michel Temer’s year-long administration as necessary step to rebuild trust with investors.

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BRAZIL POLITICS: Temer to Raise Taxes, Freeze Spending

Brazil’s government will increase this year’s spending freeze and raise taxes to cover a budget gap, two sources told Reuters on Thursday, reinforcing its commitment to fiscal discipline but dealing a potential blow to fragile economic growth.

The government will freeze an additional 5 billion reais ($1.60 billion) in federal spending this year and raise fuel taxes to collect 11 billion reais in extra revenues, said the sources, who requested anonymity because the measures had yet to be publicly announced.

Brazil lost its investment-grade rating in 2015 after missing its budget targets for years.

The country’s renewed austerity effort has weighed on public investments in infrastructure and disrupted services such as passport issuance, but has been justified by President Michel Temer’s year-long administration as a necessary step to rebuild trust with investors.

Officials had previously said they planned to reduce the spending freeze, currently at 39 billion reais, as tax revenues were expected to increase.

Finance Minister Henrique Meirelles on Wednesday said in an interview to GloboNews TV that the budget restrictions were reaching excessive levels and could be reduced within 60 days.

Brazil targets a budget deficit of 139 billion reais this year before interest payments. The deficit in the 12 months through May reached 167.6 billion reais, equivalent to 2.59 percent of gross domestic product.

The measures are expected to be announced later on Thursday, ahead of the July 22 deadline for a bimonthly budget revision.

The tax hike will be implemented by executive decree and will not need endorsement by Congress — bypassing lawmakers’ strong opposition to tax increases in the recession-hit economy ahead of an election year.

Brazil’s economy is expected to grow 0.3 percent in 2017 after contracting by more than 3 percent in each of the past two years, according to a weekly central bank poll of economists.

The Finance Ministry declined to comment.

– Reuters


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Politicoscope
By Politicoscope July 21, 2017 00:00

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Since You’re Here, We Would Like to ask You for Help

There are more readers worldwide reading the Politicoscope daily news content than ever before. Unlike many other news media organisations that charge their readers subscription fees for the same daily news content and features we offer you for free, we do not charge all our readers to pay any fee. We depend on online advertising to generate the revenues to fund all these great news content and exclusive features provided to you for free. Currently, advertising revenues are quickly falling which is affecting our ability to offer you free online news content.
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