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Weekly Report - 29 October 2015 (WR-15-43)

BRAZIL: Government adjusts target as deficit climbs

In an announcement that surprised few, on 27 October the Brazilian government led by President Dilma Rousseff revised down its primary fiscal target; the budget balance before interest payments. The government now expects a primary fiscal deficit of 0.85% of GDP, R$51bn (US$13.3bn). Many analysts expect this may be optimistic, as it relies on at least R$11bn in revenue from the sale of concessions for 29 hydroelectric power stations in an auction due on 25 November. Given the many legal obstacles faced by companies currently operating hydroelectric plants in Brazil, particularly in the Amazon, this may be ambitious. The deficit could also grow if the government decides to pay debt it owes to state-controlled lenders before the end of the year.

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