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