Brazil’s Fiscal Targets

BRASILIA (Reuters) – Brazil’s Finance Minister Fernando Haddad stated on Friday that the government aims to meet its fiscal target this year if Congress approves compensation for payroll tax waivers.

The government’s goal for the year is to eliminate the primary deficit, excluding interest payments, within a tolerance band of 0.25% of GDP, either up or down. This implies the primary deficit could be approximately 29 billion reais ($5.13 billion).

According to central bank data released on Friday, the central government encountered a primary deficit of 8.6 billion reais in July and a total deficit of 269 billion reais over the past 12 months.

Speaking at an event in Sao Paulo, Haddad remarked that the July figure aligns with the year’s target.

Government officials have emphasized that fiscal outcomes during the second half of the year are expected to improve compared to the first half, which included the anticipation of significant expenditures, such as court-ordered payments.

Haddad observed that had the government authorized 100% of last year’s proposals, it would be positioned for a zero primary deficit this year, providing sustainability.

Additionally, he assessed the labor market as being overheated and noted that now is the time to adjust social programs.

Haddad also expressed that Latin America’s largest economy is expanding at a rate of 3% and that, given its potential, it should not aim for growth below the global average.

($1 = 5.6489 reais)