Brazil congress approves deficit spending proposal by interim govt

Brazil’s congress early on Wednesday approved a deficit spending plan proposed by the interim government of President Michel Temer after 16 hours of debate. The government says it is facing a record 170.5 billion reais (USD 48 billion) primary budget deficit in 2016, far higher than suspended president Dilma Rousseff’s earlier fiscal target of a 97 billion reais deficit.

The new deficit target reflects what the economy team says is the significantly worse financial picture uncovered after Rousseff’s departure.

The primary deficit, a key indicator for creditors, measures the difference between government spending and revenue, excluding interest payments on debt. To try and balance the books, Temer has proposed austerity measures and bringing efficiency to the bloated government.

“This is a just figure, a good figure for the country,” said lawmaker Dagoberto Nogueira, who supported increasing the deficit.

Temer, who took power May 12 after the suspension of president Dilma Rousseff pending her impeachment trial, is seeking to cement his authority in the face of multiple challenges on both the economic and political fronts.

Latin America’s strongest economy is forecast to end 2016 in the red for a third year in a row, while it is enduring the worst recession in a century.