Congress to debate R$ 28bn fiscal adjustment next week
São Paulo, 29 - The government announced yesterday a public accounts adjustment
program that will demand a fiscal effort of R$28.010bn, which corresponds to 3.08%
of GDP. The plan foresees that Brazil's economy will shrink by 1% and that interest
rates will gradually decline. Finance minister, Pedro Malan, said that the reduction of
international loans led the government to abandon its softer approach of the public
deficit and adopt a stricter program.
According to Malan, the government accepts to negotiate with Congress all items
announced, except for the fiscal goal. Of the R$28.010bn, R$13.3bn correspond to
extra revenues to be raised with higher taxes. Expenditures will be reduced by
R$8.7bn, while the public Welfare system will generate an extra R$2.6bn.
However, interest rates will not be reduced immediately, according to Finance
Ministry Economic Policy secretary, Amaury Bier. The government expects interest
rates to stand at some 20% one year from now.
Higher taxes should consume 0.4% to 0.6% of the companies' turnover. The
Temporary Tax on Financial Transactions (CPMF - the so-called check tax) will
stand at 0.38%, up from 0.20%, while the Tax for Social Security Financing (Cofins )
will increase to 3% from 2%.
Congress should begin to analyze the fiscal measures by Wednesday (04). The
CPMF hike and the Welfare reform constitutional amendment will be the first topics
to be discussed by legislators. (O Estado de S. Paulo/ Jornal da Tarde/ Folha de
S.Paulo/ Gazeta Mercantil/ Jornal do Brasil/ O Globo/ Correio Braziliense. Edited by
Sergio Caldas) |
