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LatinNews Daily - 27 July 2021

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In brief: Brazil hails reduction in government subsidies

* Brazil’s economy ministry has released figures on the subsidies awarded by the government last year, which show the “success of the subsidies reduction policy adopted from 2016 onwards”. The federal government awarded R$346.6bn (US$66.96bn) in subsidies and financial incentives last year, equivalent to 4.65% of GDP. This is down from R$359.6bn, or 4.85% of GDP, in 2019. Tax incentives accounted for R$320.7bn of last year’s subsidies, with the remaining R$26bn coming from credit and financial incentives. Under the terms of a constitutional reform approved earlier this year, the government must by September present a plan to congress for reducing subsidies to 2% of GDP by 2029, as well as cutting tax incentives by 10% before the end of this year. While financial and credit incentives have fallen since the government began to pursue a policy of reducing subsidies, tax incentives have remained largely stable (they amounted to 4.31% of GDP last year, compared with 4.33% in 2019 and 4.5% in 2015).