By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – In yet another blow to Brazil’s ailing economy, Brazilian President Dilma Rousseff is expected to present the country’s 2016 budget with a forecast of a significant primary deficit, according to reports by the country’s major daily newspapers, O Globo, Folha de S. Paulo and Estado de S. Paulo. President Rousseff met with cabinet members on Sunday to finalize the 2016 Budget Bill that will be sent to Congress on Monday (August 31st) for approval.
After receiving harsh criticism, the government backed off the idea of reinstating a tax over financial transactions (CPMF). The government was discussing the reinstatement of the tax, stating that it would help fund the country’s health system. The idea received widespread criticism from the business community and Congressional representatives, some who stated that Brazil’s legislative body would never approve of the measure.
Finance Minister Joaquim Levy told reporters over the weekend that the CPMF was needed to reduce the huge decline in government revenues because of the unfavorable economic scenario.
One of the government’s biggest fears is that with the deficit forecast, international ratings agencies will withdraw the country’s investment grade, making it harder for the country to attract foreign investments and obtain foreign loans.
In an interview to Agencia Brasil, government Senate leader, Delcidio Amaral said that bill to be sent to Congress is likely to show the size of deficit facing the government next year. “The solution is to present the budget and then negotiate [with Congress],” he said. The original budget forecast, made at the beginning of the year, called for a primary surplus target of 0.7 percent of the GDP.