After a marathon debate ending early Thursday, a joint session of the Brazilian Congress approved the basic text of a government bill elevating the deficit limit for 2017 and 2018. Congress must still vote on amendments next week before completing action on the bill. The bill would raise the deficit limit for both years to R$159 billion. Currently, the limit is R$139 billion for 2017 and R$129 billion for 2018. For technical reasons, the administration of President Michel Temer will be obliged to submit a 2018 budget to Congress later Thursday, maintaining the old limit of R$129 billion. Later, the government will be able to send a “correction” to alter the limit to R$159 billion. Earlier this month, the administration asked Congress for the new limits, admitting that it has been unable to boost tax revenues or cut spending sufficiently to meet the R$139 billion ceiling f or this year. The government is even having trouble meeting the new, higher limit. Figures released Wednesday showed a 12-month deficit through July of more than R$170 billion. The persistent deficits will likely oblige the government to order a severe budget sequester later in the year.
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