BRAZIL: Government To Announce Watered Down 2017 Fiscal Target

(RTTNews) - The Brazilian government will on Wednesday announce a new fiscal target for 2017, amid an elusive tax revenue recovery, according to Finance Minister Henrique Meirelles.

Currently, Brazil's fiscal target for 2017 is a primary deficit of R$ 139 billion (US$ 43.59 billion), but investors believe the target could rise to R$ 170 billion (US$ 53.31 billion). Meirelles, however, said earlier today that the upward revision should no go that far.

He added that government is still assessing extraordinary revenues, especially in the energy sector. He noted that the government has already reached its limits for tax increases, after virtually doubling taxes on fuels at the end of July.

He added that the Brazilian government is discussing changes to the so-called "Refis" bill, which allows companies and individuals to renegotiate delinquent tax payments.

The original bill authorized individuals and companies to pay what they owed to the government in more friendly terms than they would have without the legislation. However, lawmakers sweetened the deal, changing the draft law to include lower interest rates, smaller penalties, and other perks to those interested in eliminating their overdue tax payments.

As a result, the government's initial revenue expectation with the program, of R$ 13 billion, decreased to around R$ 500 million.

A new proposal should be presented to balance the bill and minimize government losses.

The market forecast for the Brazilian government's primary deficit in 2017 increased to R$ 154.841 billion, according to a monthly survey by the Ministry of Finance. In July's survey, market players estimated a R$ 145.268 billion deficit by year-end.