Brazil Cuts $2.6 Billion From Budget in Longshot Bid to Hit Goal

  • Reductions may not be enough to meet primary surplus target
  • Missing goal may reinforce requests to impeach Rousseff

Brazil’s government will trim more than 10 billion reais ($2.6 billion) from this year’s spending budget in a last-ditch effort to meet its fiscal target.

The presidential press office announced the reductions in a statement Friday, adding that it will provide more details in a decree on Monday.

The cuts may not be enough and President Dilma Rousseff’s administration is expected to miss its goal of posting a surplus before interest payments of 66 billion reais in 2015.

Finance Minister Joaquim Levy is asking Congress to approve legislation that would relax the target and allow the administration to shoot for a primary deficit of 120 billion reais this year, including overdue payments to state banks and other institutions. Legislators are expected to vote Dec. 1 on the proposal after repeatedly postponing the decision in recent weeks.

If Congress doesn’t pass the bill, the administration must either meet the original target for a primary surplus or it would violate the budget law. Any breech of that law could provide grounds to open impeachment proceedings against the president, according to University of Sao Paulo law professor Jose Mauricio Conti. Impeachment is a protracted process in Brazil that could result in Rousseff’s ouster.

The government has posted a primary budget deficit for the past five months as the recession restricts tax collections. The real depreciated 2.6 percent to 3.8417 per U.S. dollar at 5:58 p.m. local time.

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