BRASÍLIA: In Brazil, the government changed the fiscal target to a deficit of about (-)170 bn reais ($48.4 billion), equivalent to 2.75% of GDP in 2016. Last year the government posted a record deficit of 1.94% of GDP. The new target shows that the fiscal result for this year will be worse than expected so far (our forecast was for a primary deficit of 100 bn reais, equivalent to 1.5% of GDP).
Although in the coming weeks new measures to cut spending and increase government revenue might be implemented, solving the fiscal problem is a complicated task. Finance Minister Henrique said the government will announce new measures next week.
