• Government this week gave up on primary surplus in 2015
  • Stalemate on fiscal measures has led to sovereign downgrades

Brazil’s central government primary budget deficit was narrower than expected last month as Finance Minister Joaquim Levy strives to fortify fiscal accounts to stave off another sovereign downgrade.

The gap, which excludes interest payments as well as municipalities and government-run companies, was 6.9 billion reais ($1.8 billion) in September, Brazil’s Treasury reported Thursday. The median estimate of 23 economists surveyed by Bloomberg was for a primary deficit of 13.5 billion reais following a gap of 5.1 billion reais in August. The central government primary deficit this year September amounts to 0.49 percent of gross domestic product.

The government this week gave up on posting a primary budget surplus in 2015 as a shrinking economy and dissent in Congress stymie tax-collection efforts. In the latest setback for the administration, lawmakers on Wednesday postponed voting on legislation designed to raise fiscal revenue by creating incentives for Brazilians to pay a fine and repatriate money held abroad. Meanwhile party leaders say it’s unlikely Congress will approve Rousseff’s plan to revive a levy on bank transactions.

The stalemate in Congress led rating companies to downgrade Brazil’s sovereign debt in recent months. Standard & Poor’s in September took away the nation’s investment-grade status, and Fitch Ratings followed five weeks later by cutting Brazil to the cusp of junk.

The real depreciated 0.3 percent to 3.9147 per U.S. dollar at 9:06 a.m. local time.

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