Brazil’s Dilma Rousseff stares down budget black hole

Joe Leahy – Financial Times, 11/6/2015

Every week that passes in recession-hit Brazil seems to bring a new, bigger estimate for the size of the hole in the government’s finances.

The latest came on Wednesday from Hugo Leal, a lawmaker from congress’s fiscal commission who is overseeing a bill covering the government’s 2015 budget. He said he would amend the bill to allow for a 2015 primary fiscal deficit — the budget balance before interest rates — of R$119.9bn (US$32bn), more than double that of the government’s most recent official estimate.

The blowout, which mainly accounted for government off-budget liabilities with state banks, highlights the central problem facing Latin America’s biggest economy. Politicians are struggling to agree on and implement an austerity programme to plug the widening gap in government finances, creating uncertainty over the sustainability of public debt and undermining investor confidence.

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