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Montevideo, September 23rd 2018 - 18:55 UTC

Brazil anticipates 'program of targeted tax increases' and 'fare realism' for power and fuel

Wednesday, January 14th 2015 - 09:19 UTC
Full article 26 comments
“We have no intention of producing a bag of tricks or packages -- but we shall have to take some measures,” Joaquim Levy told reporters “We have no intention of producing a bag of tricks or packages -- but we shall have to take some measures,” Joaquim Levy told reporters

Brazil's finance minister said on Tuesday a program of targeted tax increases was designed with the intention to not harm fragile growth in Latin America's largest economy. Joaquim Levy also pledged 'fare realism' for electricity bills and fuel prices based on 'business reasons'.

 “We have no intention of producing a bag of tricks or packages -- but we shall have to take some measures,” Joaquim Levy told reporters as he sets about devising a strategy to lift an economy struggling after four years of low growth.

”Any movement (in tax rates) will be compatible with our objectives,“ he insisted.

After posting a first annual trade deficit in 14 years last week, the world's seventh biggest economy announced budget cuts of 8.4 billion a year, with newly re-elected President Dilma Rousseff signing a decree limiting discretionary spending on travel, services and purchasing.

Brasilia has also announced that it is tightening access to unemployment insurance.

Public accounts deteriorated in Rousseff's first term amid continued massive social welfare programs which have lifted tens of millions of people out of poverty over the past decade.

Levy is now looking to steer the economy, forecast to barely grow in 2015, off the rocks while keeping a lid on inflation, which hit a government ceiling of 6.5% at the end of last year.

Taking up his position last week, Levy said Brazil would have to ”rebalance a few taxes as some were reduced a while ago“ and the resulting lack of revenue had been keenly felt.

He also indicated that he was targeting the ”long-term“ reduction of net public debt while increasing savings and attracting sagging investment as Brazil looks to restore market confidence. Public debt stands at 63% of GDP.

Levy anticipated that the Brazilian government will not give any extra funds to indebted power utilities this year to avoid further harm to its finances. The minister said the purpose was to bring electricity rates more in line with reality, which means consumers should pay the rising prices caused by lower output from hydroelectric power plants.

”Fare realism“ will help consumers and companies better plan for the future and ease the burden on strained government coffers, Levy said.

The minister also anticipated that he believed Petrobras ”would set fuel prices based on business reasons”, signaling a break with a recent policy of suppressing gas prices to control inflation.

Categories: Economy, Politics, Brazil.

Top Comments

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  • ChrisR

    He can anticpate what he likes: I anticipate another round of violence, buses set on fire (that'll help) and general anti-government backlashes in the north of this ill managed, riddled with idle bastards on the take and corrupt government third world country.

    Jan 14th, 2015 - 10:29 am 0
  • Brasileiro

    Every parting is painful. I fully understand you.

    Brazil should quickly integrate supply chains led by China. When this happens everything will be solved with the West.

    Jan 14th, 2015 - 12:00 pm 0
  • yankeeboy

    The U$ is expected to be 10-15% higher over the next year. Money will flow out of 3rd world risky investments into the USA.
    Commodities will further go lower.
    Brazil is screwed.
    They spent their windfall from the last decade and got a temporary boost for their people with nothing sustainable to show for it.
    They're right behind Argentina on the road to ruin.

    Jan 14th, 2015 - 12:14 pm 0
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