By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – The interim government of Brazil estimates that the primary budget deficit will reach R$170.5 billion in 2016, approximately 2.5 percent of the country’s GDP. The new estimate is a jarring 76.4 percent higher than the R$96.7 billion deficit estimated in March by the Rousseff Administration.
According to Brazil’s new Finance Minister, Henrique Meirelles, the current estimate ‘is much more realistic’, and includes the renegotiation of debts by the federal government with state governments as well as losses registered in state-owned energy giant, Eletrobras.
If these estimates are proven to be correct, it would be the third consecutive year Brazil registers a deficit in its primary accounts.
Economists say Brazil’s deficit problem is also hindered by the drastic decrease in federal revenues. In April, for example, revenues obtained by the federal government through taxes and contributions registered the lowest value in six years for the month, at R$110.895 billion.
The total represents a decline by 7.1 percent in relation to April of 2015. For the first four months of the year, revenues from taxes and contributions registered a decline of 7.91 percent in comparison to the same period in 2015. The value obtained from January through April of 2016 is also the lowest in six years for that time period.
Last year Brazil’s Congress approved a budget bill last year which called for a primary surplus of R$24 billion in 2016 but due to the deterioration of the economic scenario and the steep decline in revenues the administration revised the budget to register a deficit in November of 2015.
Brazil’s Congress now must approve the new deficit target or the administration of interim President Michel Temer runs the risk of shutting down. According to the head of the Senate, Renan Calheiros, the primary deficit should be approved by Congress on Tuesday. “No one is interested in rendering this government illegal (in spending),” Calheiros told reporters on Monday.