BRAZIL-ECONOMY/FISCAL Brazil 2016 budget gap forecast is 'worrisome' - vice president

Record ID: 140612

  • Title: BRAZIL-ECONOMY/FISCAL Brazil 2016 budget gap forecast is 'worrisome' - vice president
  • Date: 31st August 2015
  • Summary: SAO PAULO, BRAZIL (AUGUST 31, 2015) (REUTERS) ***WARNING CONTAINS FLASH PHOTOGRAPHY*** BRAZILIAN VICE PRESIDENT, MICHEL TEMER, SPEAKING AT EVENT, STANDING NEXT TO A JUMBO SCREEN MORE OF TEMER SPEAKING GENERAL OF EVENT JOURNALISTS WORKING ON THEIR LAPTOPS MORE OF TEMER SPEAKING (SOUNDBITE) (Portuguese) BRAZILIAN VICE PRESIDENT, MICHEL TEMER, SAYING: "The news that is in today's newspapers, of a budget deficit, is something that is extremely worrisome. Why does the budget show a deficit? First of all, because it shows complete transparency in budgetary issues. Namely, that there is no 'make up' covering the accounts. And furthermore, because it had intended to, as you know from this very week, to re-institute a tax, which has a tainted past, which is the Provisional Tax on Financial Transactions [CPMF]." A SIGN AT THE EVENT THAT READS, 'PREPARE TO MAKE PLANS FOR 2016 AND TO OVERCOME THE CRISIS' WRITTEN IN PORTUGUESE (SOUNDBITE) (Portuguese) BRAZILIAN VICE PRESIDENT, MICHEL TEMER, SAYING: "If we had filled the budgetary deficit with the CPMF, we might have had the CPMF defeated, giving us a political defeat and in consequence, an economic defeat. Because the deficit, considering the absence of the tax, underlines this 30 billion reais deficit." PEOPLE APPLAUDING AFTER TEMER SPEAKS
  • Embargoed: 15th September 2015 13:00
  • Keywords:
  • Location: Brazil
  • Country: Brazil
  • Topics: General
  • Reuters ID: LVA54WR0PCTTKIBTCJ2S8SYAQFUA
  • Aspect Ratio: 16:9
  • Story Text: Brazilian Vice President Michel Temer on Monday (August 31) expressed profound concern over the government's budget forecast of a primary budget deficit next year.
    The vice president warned such a shortfall could cost Brazil its investment-grade credit rating.
    He said that budget's assumption of a primary deficit of 30 billion reais ($8.23 billion dollars) was "extremely worrisome" and he called on Congress to pull together to erase that projected gap.
    President Dilma Rousseff's government is to unveil the 2016 budget before Congress later on Monday.
    Over the weekend, Rousseff dropped the idea of including the reintroduction of a 0.38 percent tax on financial transactions, known as CPMF, after the plan ran into a barrage of criticism even from within her coalition.
    Temer, who himself was opposed to the reintroduction of the CPMF, said the budget did not gloss over or cover up the budget shortfall.
    "The news that is in today's newspapers, of a budget deficit, is something that is extremely worrisome. Why does the budget show a deficit? First of all, because it shows complete transparency in budgetary issues. Namely, that there is no 'make up' covering the accounts. And furthermore, because it had intended to, as you know from this very week, to reinstitute a tax, which has a tainted past, which is the Provisional Tax on Financial Transactions [CPMF]," Temer said.
    Temer was joined by many business leaders and some opposition politicians in opposing the plan to revive the unpopular tax.
    Temer said its inclusion could have complicated getting legislative approval for the budget had it not been taken out.
    "If we had filled the budgetary deficit with the CPMF, we might have had the CPMF defeated, giving us a political defeat and in consequence, an economic defeat. Because the deficit, considering the absence of the tax, underlines this 30 billion reais deficit," Temer said.
    The real weakened nearly 3 percent against the U.S. dollar earlier on Monday on fears of a credit rating downgrade before paring gains to trade 1 percent weaker on the day.
    In recent months, Temer has spearheaded efforts to push through austerity legislation to cut a fiscal deficit. His role has been crucial in trying to restore the government's credibility with markets.
    The primary budget deficit expectation comes just over a month after the government drastically cut its 2016 primary budget surplus target to 0.7 percent of gross domestic product from 2 percent. For this year the goal has been 0.15 percent of GDP.
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