Brazil/Public Deficit/Debt -3: Fiscal Goal Review Possible
Dow Jones Newswires
The accumulated nominal public deficit for the first 10 months of 1998 stands at BRR56.39 billion, compared with BRR34.21 for the same year-earlier period.
Commenting the public deficit figures, Central Bank economic policy director Altamir Lopes said that he was confident that the 1998 projection of a deficit of BRR72.88 billion for the year will be reached thanks to an expected improved primary result for November and December and the drastic cut in interest rates in December.
Brazil has committed itself to a fiscal goal of a public deficit of 4.7% of GDP for 1999 as part of the $41.5 billion IMF-led international preventive aid-package accord announced at the end of last year.
Lopes said that following Wednesday's Central Bank decision to scrap the real-dollar crawling band and adjust upward the wide band - effectively devaluing the real - doesn't necessarily mean the fiscal goals have to be reviewed. But, he added, this could be possible.
"Dollar-linked debt can possibly increase, but the expected lowering of interest rates over the next few months might partially offset the losses," Lopes said.
Lopes, who was one of the chief negotiators leading up to the IMF deal, added that it is possible that the terms of the accord could be renegotiated.
"I'm not saying that this will necessarily happen, and even if it does, it doesn't necessarily mean that the fiscal goals will definitely be reset," he commented.
According to Lopes, the foreign exchange shift doesn't make it compulsory to review the accord.
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