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03/01/2018 - 15:09hs

President enacts budget

Brazil’s 2018 Budget Law provides for a USD 47 billion deficit and works with a 2.5% Gross Domestic Product (GDP) growth estimate.

São Paulo – Brazil’s president Michel Temer enacted, with a veto, the 2018 Budget Law, which outlines government revenue and expenditure for this year. The budget bill had been approved last December by Congress, following a string of debates by a Joint Budget Commission. The newly-passed law was issued this Wednesday (3) in the Official Gazette.

One of the new features of this year’s budget is the allocation of BRL 1.716 billion (USD 521 billion) to the Special Campaigns Fund (FEFC, in the Portuguese acronym), designed to cover costs leading into the 2018 elections. This is also the first budget approved under the Expenditure Cap Constitutional Amendment, which sets forth that public spending may not increase more than the previous year’s inflation for the next 20 years.

The president vetoed an additional BRL 1.5 billion (USD 456.1 million) in extra funding for the Fund for Maintenance and Development of Basic Education and Rewards to Education Professionals (Fundeb). The federal government said that despite the veto, some BRL 14 billion are earmarked for the Fundeb this year.

The budget provides for a BRL 157 billion (USD 47.7 billion) primary deficit this year, unlike the previously approved budget bill’s BRL 159 billion (USD 48.3 billion) deficit provision. The Budget Law works with 2.5% Gross Domestic Product (GDP) growth in 2018.

The bill approved by Congress set the minimum wage at BRL 965 (USD 293). New calculations have been made, factoring in GDP and inflation, and last week the government confirmed a minimum wage of BRL 954 (USD 290), effective since January 1st.

*Translated by Gabriel Pomerancblum

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