The Brazilian Central Bank on Tuesday posted public sector primary budget figures for calendar 2016, showing a record deficit of R$155.7 billion. The big deficit was, nevertheless, within the government’s budget target of R$164 billion or less. The deficit was calculated based on methodology first used in 1997. The deficit was equal to 2.47 percent of gross domestic product. By contrast, in 2015 Brazil posted a primary budget deficit of R$111.2 billion, or 1.85 percent of GDP. Deficits ballooned in 2016 because of legally mandated increases in retirement spending, and other benefits, combined with lax tax revenues. Tax revenues were down because of a persistent recession. The administration of President Michel Temer has countered with a constitutional amendment designed to rein in government spending. In addition, Temer has presented a proposed retirement system reform. Both government and private sector economists are hopeful for an economic turnaround in 2017, increasing revenues and easing pressures on government spending.
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