* Government plans to add 13.5 billion reais to finances
* 2012 primary surplus target at risk as revenues slide
By Luciana Otoni
BRASILIA, Jan 3 Brazil plans to tap state lender
Caixa Econômica Federal and its sovereign wealth fund
to meet a closely-watched fiscal savings target in 2012, a
senior government official told Reuters on Thursday.
The government will repurchase 13.5 billion reais ($6.63
billion) of public debt owned by the Caixa and the fiscal
investment and stabilization fund, known for its Portuguese
initials as FFIE, the official said on condition of anonymity.
The proceeds from the repurchases will be channeled back to
the government in order to reach its 139.8 billion reais primary
budget surplus goal - a gauge of the country's ability to
service its debt.
The administration of President Dilma Rousseff has struggled
over the past year to generate enough revenues to reach its
surplus target, which is seen as one of the main policy pillars
of Brazil's new-found economic stability.
A sharp slowdown in tax revenues coupled with tens of
billions of reais in tax relief to bolster a near-stagnant
economy have threatened the savings goal, which is equivalent to
about 3.1 percent of the country's gross domestic product.
The government has already said it will use alternative
accounting methods to reduce the fiscal target by 25.6 billion
reais. However, even with that reduction the target is at risk
after the government posted a primary deficit in November.
To reach the adjusted target the government will need to
post a primary surplus of 31.5 billion reais in December.
The government has announced the repurchase of 8.8 billion
reais in debt from the FFIE fund. The proceeds will be
transferred to the sovereign wealth fund in order to be
considered primary revenue, the source said.
In coming days, the source added that authorities also
planned to announce the buyback of 4.7 billion reais in debt
from Caixa, which will return those proceeds to the government
Some analysts have warned that policymakers are leaving
behind the fiscal discipline that allowed the government to
drastically cut its debt burden and avoid the crises that
plagued Brazil in the last century.
Some economists predict the South American nation would
again miss its primary target in 2013 due to a surge in public
spending and further tax breaks aimed at supporting the economy.
Waldemir Quadros, a public administration professor at PUC
in Sao Paulo, said the accounting maneuvers used by the
government to reach the target reflected the poor quality of the
"The government uses (measures) that are at limit of what is
legal to do creative accounting," Quadros said.