The Brazilian government will on Monday send to Congress a 2016 budget proposal that projects a primary deficit instead of the previously expected surplus, Brazilian media reported quoting presidential aides.
This follows President Dilma Rousseff’s rethink on the idea of reinstating a 0.38 per cent tax on financial transactions to bridge a gaping fiscal deficit.
The tax was abolished by Congress in 2007.
The Folha de S.Paulo and Estado de S.Paulo newspapers said Finance Minister Joaquim Levy’s team had decided on setting more realistic, transparent budget targets. Brazilian media reports estimated the shortfall in the 2016 budget at about 80 billion reais .
The government is facing the challenge of boosting investor sentiment that has cooled amid fiscal deterioration in Latin America’s largest economy.
Tax revenue has dropped below government estimates this year as the economy slows amid austerity measures.
For 2015, Brazil is targeting a primary surplus of 0.15 per cent of gross domestic product.
Brazil’s GDP shrank by 1.9 per cent in the second quarter of 2015 compared with the previous quarter.
Rousseff is trying to convince investors she will change policies to adopt more fiscal prudence and aggressively fight inflation to reverse a drop in business confidence, which has dragged down the once-booming economy.
TBP and Agencies