Brazil’s government on Friday released its bimonthly budget report, showing declining revenues and rising costs for 2017. The report comes one day after a government decision to freeze additional federal spending while raising taxes on fuels. The government releases the bimonthly reports as part of its budget targeting program. Under this year’s program, the federal government is committed to a primary budget deficit no higher than R$139 billion. According to Friday’s report, revenues this year will fall short of budget estimates by R$5.8 billion. Spending will exceed early-year estimates by R$4.6 billion. Part of the problem is the disappointing results of the government’s second round of capital repatriation. Under the program, Brazilians with undeclared overseas funds are allowed to normalize them via payment of a 35% tax. The government had expected additional revenues this year from the program of R$12.7 billion. Instead, the new estimate is just R$2.9 billion. To meet the budget gap, the Finance Ministry on Thursday announced tax hikes over fuels designed to raise additional revenues this year of R$10.4 billion. The ministry also announced a budget freeze of R$5.9 billion. As part of Friday’s bimonthly report, the government maintained its forecast for 2017 GDP growth at 0.5%, slightly higher than market forecasts.
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