BRASILIA, Nov 10 (Reuters) - Brazil’s small primary budget surplus target for next year could be reduced further to pay government arrears, according to changes in a budget guidelines bill under review by congressman Ricardo Teobaldo, who sponsored the bill.
In a copy of his amendment to the bill, Teobaldo proposed that the government be allowed to deduct up to 30 billion reais ($7.90 billion) in public investment from its primary surplus target next year. The primary surplus, or public savings prior to debt interest payments, is a key gauge of a country’s capacity to repay its debt.
President Dilma Rousseff has vowed to deliver a primary surplus of 43.8 billion reais or the equivalent to 0.7 percent of gross domestic product in 2016 after two straight years of deficit.
Massive debts the government holds with state-run banks could widen this year’s deficit to a record 117 billion reais or 2 percent of GDP.
The government has said it could pay state-run lenders 57 billion reais in arrears this year. The country’s federal accounts court, known as TCU, has to decide whether the government should make that payment immediately or in installments.
A joint congressional commission is expected to analyze on Wednesday the 2016 budget guidelines bill as well as legislation to change this year’s primary target.
The guidelines bill has to be approved before the actual 2016 federal budget is voted in Congress.
$1 = 3.7965 Brazilian reais Reporting by Marcela Ayres; Writing by Alonso Soto; Editing by James Dalgleish