BRASILIA (Reuters) – Brazil Finance Minister Fernando Haddad said on Friday that the government should close this year within the tolerance band of its fiscal target if Congress approves the compensation for payroll tax waivers.
The government’s goal this year is to eliminate the primary deficit, which excludes interest payments, with a tolerance band of 0.25% of GDP, either up or down. This means that the primary deficit could be close to 29 billion reais ($5.13 billion).
Central bank data released on Friday showed that the central government posted a primary deficit of 8.6 billion reais in July and a deficit of 269 billion reais over the past 12 months.
Haddad, speaking at an event in Sao Paulo, said that the July figure was in line with the year’s target.
Government members have stressed that fiscal results in the second half of the year will be better than in the first, which saw the anticipation of significant expenditures, including court-ordered payments.
Haddad noted that if the government had approved 100% of what was proposed last year, it would be on track for a zero primary deficit this year, making it sustainable.
The minister assessed that the labor market is overheated, and now is the time to adjust social programs.
He also said that Latin America’s largest economy is expanding by a rate of 3%, and given its potential, it should not settle for growth below the global average.
($1 = 5.6489 reais)
(Reporting by Marcela Ayres; Editing by Chris Reese and Mark Porter)