World Economy

Amnesty Program Eases Brazil’s 2016 Budget Gap

The year 2017 will be very difficult for the trade sector.The year 2017 will be very difficult for the trade sector.

Brazil’s central government reported its first primary budget surplus in six months in October, thanks to an inflow of billions of dollars from an asset amnesty program.

The South American country posted a budget surplus of 40.814 billion reais ($11.9 billion) in October, a turnaround from a deficit of 25.303 billion reais in September, Reuters reported.

October’s surplus reduced the central government’s shortfall so far this year to 55.821 billion reais.

The fiscal reprieve will be short-lived as tax revenues continue to fall amid the country’s worst recession in at least eight decades. Federal tax revenues data released earlier on Friday showed income would have dropped without the so-called repatriation program.

The central government, which includes federal ministries, social security and the central bank, had been expected to post a surplus of 25.261 billion reais, according to the median forecast in a Reuters poll of eight economists.

The government reaped 46.8 billion reais from the program which gave criminal amnesty to Brazilians who paid fines and taxes on undeclared assets held abroad. A second repatriation program is planned for next year.

Meanwhile, the President of the Foreign Trade Association of Brazil, Jose Augusto de Castro, anticipated that the year 2017 will be very difficult for that sector which will reach a superavit of $35 billion.

No engineering project was approved this year, so the exports of manufactured goods should register a loss between $1.5 and 2.0 billion. The country’s exports of goods and services should total $190 billion and imports reach $155 billion, he estimated, according to a Prensa Latina report.

As the businessman declared to Agencia Brasil, in 2016 the superavit in the trade balance is not really a positive result for the country, as it will be reached due to the fall in exports and imports.

When sales and acquisitions fall alike, jobs also drop then there is no real gain. The situation of foreign trade depending on exchange rates is difficult, he stressed.

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