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Brazil’s Temer says leaving budget deficit under 130 billion reais

Brazil’s Temer says leaving budget deficit under 130 billion reais

BRASILIA: Brazilian President Michel Temer said on Thursday his government will leave a primary budget deficit of less than 130 billion reais ($33.3 billion) when he hands over the reins to President-elect Jair Bolsonaro on Jan. 1.

Temer told reporters that Brazil could take up to 10 years to balance its federal budget. He urged Congress to pass his proposal for a minimum retirement age to advance the pension reform that his successor will inevitably have to tackle.

Due to an increase in the population’s age and the number of retirees, Brazil’s generous pension system is becoming a bigger chunk of the country’s budget deficit. Investors and credit rating agencies are watching how the matter is dealt with because it is adding to a mounting public debt.

The deficit could end this year some 20 billion to 25 billion reais below target, according to Temer’s estimates.

Temer said he expects Bolsonaro’s incoming government to follow its fiscal austerity policies and maintain a spending ceiling, which was his main achievement toward putting Brazil’s accounts in order during his two-and-a-half years in office.

“I think the Bolsonaro government will succeed,” he said, noting that the president-elect, who was elected in October without the backing of Brazil’s traditional parties, has begun to reach out to congressional caucuses to back his agenda.