BRASILIA, Oct 27 (Reuters) - Brazilian lawmakers are considering changing the 2015 budget law to allow for the deduction of up to 113.5 billion reais ($29.05 billion) from the government’s main fiscal target in an attempt to clear one of the main political hurdles for the approval of key economic measures in Congress.
The budgetary commission of Brazil’s Congress suggested to Finance Minister Joaquim Levy and Planning Minister Nelson Barbosa the idea of deducting all the revenue lost due to tax exemptions this year.
Even if the current target remains unchanged, aiming for a surplus of 8.7 billion reais, the potential deduction could allow for an effective deficit of over 100 billion reais, said Senator Rose de Freitas, president of the budgetary commission.
The primary balance, or revenue minus expenditures before debt payments, is considered a crucial measure of a country’s capacity to repay debt.
The latest estimate by the Planning Ministry projected a primary budget deficit of 51.8 billion reais, said federal congressman Hugo Leal, the lawmaker responsible for analyzing the 2015 budget target bill, after meeting with Barbosa.
“That (the proposal) would solve the main problem, which is the deficit. I don’t know if they will accept it or not, but we are pointing to a solution,” Freitas told Reuters.
Officials at the finance and planning ministries did not immediately respond to requests for comment.
Freitas said the solution proposed is the same used last year, when the government also had to change the fiscal target at the last minute as tax revenues disappointed. Such a precedent may pave the way for a swift approval of the bill, she said.
The budgetary commission meets on Wednesday to discuss the 2015 fiscal target and the 2016 budget bill.
The Brazilian fiscal target is set by law and must be met in order to avoid any potential legal challenges. Brasil has not met the target in the last three years without various deductions, drawing criticism from investors about the transparency of the country’s accounts. ($1 = 3.9076 Brazilian reais) (Reporting by Silvio Cascione; Editing by Dan Grebler)