SAO PAULO: Brazil will no longer resort to creative accounting to meet a closely watched primary budget surplus target and expects its fiscal position to improve in 2014 with a larger tax take, Finance Minister Guido Mantega told a newspaper.
President Dilma Rousseff’s government has relaxed tough fiscal rules in recent years to bolster savings results, resulting in sharp criticism for lack of transparency and more recently warnings of a sovereign credit downgrade.
The government has brought forward dividends of state-owned companies and transferred cash from other funds to bolster state coffers, for example.
“We did not violate any rules but let’s say it was blurry, confusing even. This will change. It has already changed,” Mantega said of Brazil’s accounting practices in an interview with the Estado de S Paulo newspaper published yesterday.
He said Brazil likely would post a primary surplus, which represents the public sector’s excess revenue over expenditures before debt payments, of 73bn reais ($31.3bn) in 2013.
In the most recent monthly data, Brazil posted its smallest primary budget surplus for October in more than a decade, casting further doubt on public finances. “We have had more difficulties making the primary surplus this year, that’s true,” Mantega said.
“For next year there is one certainty: the fiscal issue will not be a problem for the economy in 2014.”
He said the government would stop cutting taxes, a cornerstone of Rousseff’s policy to speed up a sputtering economy by encouraging consumption.
“We are raising the rates of the PS (Programme for Investment), which reduces the subsidy from the Treasury to BNDES,” he said referring to the state development bank.
Investors are sceptical of improved growth in 2014, however, after data showed the economy contracted for the first time since early 2009 in the third quarter from the second quarter.
Reuters
