March 18, 2020 / 7:29 PM / 17 days ago

UPDATE 1-Brazil's Guedes urges Congress to act, help avoid 40 bln reais budget freeze

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By Jamie McGeever and Marcela Ayres

BRASILIA, March 18 (Reuters) - Brazil’s Economy Minister Paulo Guedes on Wednesday urged Congress to declare a state of emergency, which would free up the government to ramp up urgent financial support to an economy buckling under the coronavirus pandemic.

Speaking alongside President Jair Bolsonaro and cabinet colleagues in Brasilia, Guedes said this would allow the government to suspend its deficit goals for this year and help avoid budget freezes of up to 40 billion reais ($7.7 billion).

That would be this year’s projected shortfall, thanks to sharply lower revenues from cheaper oil and a 16 billion reais budget hole if, as looks likely, the privatization of utility Eletrobras does not go ahead as planned.

The government’s 2020 primary deficit target, before interest payments are accounted for, stands at 124.1 billion reais, marking the seventh consecutive year of deficit.

“This (budget freeze) would not be right. Health and protecting Brazilians’ jobs take precedence above all other interests,” Guedes said.

Guedes also unveiled a program to direct 15 billion reais to informal workers over the next three months, which will be made possible by Congress declaring a state of emergency.

Without giving details, Guedes added that domestic airlines’ debts will be renegotiated. Airline shares have been battered more than most sectors during the crisis and the companies face a desperate battle for survival.

Brazil’s government on Monday announced emergency measures to inject nearly 150 billion reais into the economy, although the package does not contain new money.

$1 = 5.23 reais Reporting by Jamie McGeever and Marcela Ayres Editing by Chizu Nomiyama and Richard Chang

Nuestros Estándares:Los principios Thomson Reuters
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