Brazil’s Budget Gap Narrows in June as Meirelles Gains Power

Brazil recorded a narrower-than-expected primary fiscal deficit in June as Finance Minister Henrique Meirelles seeks to gain more control over the federal budget and limit government spending.

The budget deficit before interest payments was 10.1 billion reais ($3.1 billion), including results of states, municipalities and state-owned companies, the central bank said Friday. That compares with a median forecast for a 15.3 billion-real gap by analysts in a Bloomberg survey. Including interest payments, the nominal deficit reached 32.2 billion reais, less than the 33.2 billion-real gap projected by analysts.

Acting President Michel Temer intends to change the structure of the Finance and the Planning ministries, putting the offices responsible for tax collection, budget planning and government spending all under Meirelles, according to an aide who was briefed on the matter and asked not to be named because the plans aren’t public.

Meirelles has said that putting the public debt back on a sustainable path is a crucial step to shore up investor confidence and pull the Brazilian economy out of its worst recession in decades. His top priority now is the congressional approval of a bill that would prevent government spending from growing above the inflation rate.

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