Brazil’s government will cut 25.6 billion reais ($12.3 billion) from its 2012 primary budget surplus target after a drop in tax collection, according to the Planning Ministry.
The central government, which includes the Treasury, the central bank and social security agency, is allowed to discount from its fiscal goal some investments made under its growth acceleration program to avoid reducing public spending amid slower economic growth.
President Dilma Rousseff’s administration reduced taxes on cars, furniture, house appliances and payroll to boost economic growth, in a move that made it harder for the government to meet its fiscal target, Finance Minister Guido Mantega told reporters Nov. 6. Latin America’s biggest economy will expand 1.5 percent this year, less than the U.S. and Japan, according to Bloomberg estimates.
The government, before discounting for investments, targeted a budget surplus before interest payments of 97 billion reais. In the first nine months of the year, the so-called primary surplus was 54.8 billion reais, or 43.5 percent of the 2012 goal.