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Brazil Finance minister disregards calls from Lula for tax breaks and more credit

Wednesday, March 30th 2016 - 08:32 UTC
Full article 8 comments
“It is not the moment to insist on more tax breaks,” Barbosa told lawmakers at a congressional hearing. “That is not the best tool to promote development.” “It is not the moment to insist on more tax breaks,” Barbosa told lawmakers at a congressional hearing. “That is not the best tool to promote development.”

Brazilian Finance Minister Nelson Barbosa said on Tuesday it is not the time for more tax breaks, disagreeing publicly with former president Lula da Silva's call for fiscal stimulus to revive a moribund economy.

 Lula, President Dilma Rousseff's predecessor and political mentor, urged the government this week to give more tax breaks and cheap credit to bolster an economy entering its second year of recession. Lula was named Rousseff's cabinet chief earlier this month, but his nomination remains in limbo pending a series of legal challenges.

Barbosa said tax breaks in recent years had gone too far and eroded the government's finances. In effect the budget deficit is estimated to stand at a record 11% of GDP.

“It is not the moment to insist on more tax breaks,” Barbosa told lawmakers at a congressional hearing. “That is not the best tool to promote development.”

He added that Brazil's biggest challenge continues to be rebalancing public finances, underscoring the need for short-term measures to stabilize the economy until more structural reforms are approved.

Barbosa acknowledged that the government will delay a much-needed pension reform due to political turmoil that threatens to unseat Rousseff.

Barbosa said that inflation could subside more quickly than investors expect, possibly falling below 7% by the end of the year from more than 10% recently. He said that the central bank could possibly cut interest rates later this year if inflation continues to slow.

Categories: Economy, Politics, Brazil.

Top Comments

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  • Skip

    More credit?

    More tax breaks?

    How about REFORM!!!!!

    Reform
    Reform
    Reform

    Get rid of the waste.
    Get rid of the bottlenecks.

    This Lula guy is a bloody idiot. He think that because he presided over a boom that he knows how to manage an economy. Any idiot can ride a boom. It is how you deal with the bust that shows true talent.

    And so far Brazil is proving talentless in this respect.

    As incompetent as my government can be at times, at least they are using the end of the resources boom to talk about reforming taxation, federation, education. They are also chasing free trade deals and trade liberalisation to create new export opportunities.

    Mar 30th, 2016 - 09:27 am 0
  • ChrisR

    @ 1 Skip

    Brazil cannot reform with the present party in power because they would all suffer massive reductions in 'income'.

    Mar 30th, 2016 - 12:08 pm 0
  • Jack Bauer

    Once again the LullaRat proves that he has been the president 'de facto' since 2011, and that Dilma is just his puppet. He is so bloody ignorant that he carries on trying to convince the Finance Minister to adopt the exact same policies which contributed to the crisis...more populism : more easy credit at high interest rates that many can't pay, and of course - tax breaks - just the thing to reduce the government's revenues even further ; but d'you think he cares ? not one bit, he thinks he's already guaranteed his future through massive stealing and corruption......but there are people who think differently, such as Judge Sergio Moro...Goodbye LullaRat !

    @1 & 2 Skip, Chris
    you both must have seen that yesterday, the PMDB has abandoned the (sinking) boat ; While it's obvious that they are doing it only to try to save their own skin, the fact is that the Dilma is now considerably weaker - as if that were possible - and should speed up her demise.

    Mar 30th, 2016 - 02:36 pm 0
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