Seeking to restrain the effects of the economic crisis, the Brazilian Government shall be more flexible regarding tax targets, so that it may be possible to accept a larger volume of expenses than income, by a difference of up to 5%.
This primary deficit of 0.5% of GDP, a target which still needs to be approved by the Brazilian Congress, shall represent an additional funding of BRL 30.5 billion, which shall be used to pay off the interest and also control the growth of public debt.
The ministries shall also have to tighten their belts and spend only 1/18 every month (no longer 1/12) of the budget that has approved for this year of 2016, from January to March. Expenses incurred by the Federal Government may not be more than BRL 146.6 billion, and priority shall be given to expenses with personnel, social programmes, and also payment of the interest on the debts.
The definite cuts shall be announced only in March, together with proposals for expense control, tax reform and changes to the pension system.
Petrobras shares rise
Ibovespa, the most important stock market index in Brazil, had a small rise of 1.25% on 12 February. This occurred due to the significant increase in the value of Petrobras shares, which rose by almost 7% in February 2016. A similar positive result was observed in the shares of the Vale do Rio Doce company. This new development has been a relief to the Brazilian share market, that had been suffering with consecutive declines.
The hike in the price of Petrobras shares could have been influenced by the announcement made by the Energy Minister of the United Arab Emirates (UAE), one of the members of the Organisation of Petroleum Exporting Countries (OPEC), about a possible cut in global production. Even though only a few believe that this measure could become reality, this has been enough to increase the price of petroleum throughout the world.
Dollar still on a high
In the meantime, the dollar continues to rise, even though it has remained in the region of BRL 4, and the São Paulo retail trade closed November 2015 with a turnover of BRL 46.8 billion, which is a fall of 10.1% compared with 2014. The Brazilian per caput income declined from BRL 16.2 thousand in 2014 to BRL 15.7 thousand in 2015.
On the other hand, some indicators have remained positive. The inequality in the distribution of income and also the number of poor people have declined. At the same time, access to health services and quality education have become easier for the less affluent communities.