(Recasts, adds analyst's comment and surplus goal details)
BRASILIA, April 15 The Brazilian government said
on Tuesday it will aim for a higher fiscal savings goal for
2015, promising more austerity despite increasing worries of
rising subsidies and slower growth in tax revenue as the economy
In its 2015 budget guidelines bill, the government said it
will pursue a consolidated primary surplus goal equivalent to
2.5 percent of gross domestic product, but set 2 percent as its
floor for the year. The two figures are higher than this year's
goal of 1.9 percent of GDP.
The government estimates economic growth of 3 percent in
2015, well above market forecasts of an expansion of only 2
Still, Finance Minister Guido Mantega said the primary
surplus goal could be raised further if the economy picks up
speed in 2015.
"We will work for a surplus of 2.5 percent and the minimum
will be 2 percent," Mantega said at a press conference in
This year's primary surplus goal, which represents the
public sector's net revenues over expenditures before debt
interest payments, is considered out of reach by many analysts
who say the government will not be able to save enough money
during an election year.
The possibility of more energy subsidies next year to help
struggling electricity distributors and expectations for the
economy to remain subdued could jeopardize the government's
plans to meet its new target in 2015.
"The economy is growing slowly and there are no expectations
for an increase in tax revenues ... there are no indications
that these goals can be achieved under the current policies,"
said Alcides Leite, an economics professor at Trevisan Business
School in Sao Paulo.
The primary surplus, which includes results from the
federal government, states and municipalities and social
security system, is seen as a key measure of a country's
capacity to repay its debt.
The government will need to save up to 143.3 billion reais
this year to meet its primary surplus goal this year. Most of
those savings will come from the federal government, according
to a finance ministry presentation.
A rapid erosion of the country's finances under President
Dilma Rousseff prompted Standard & Poor's to cut Brazil's rating
closer to junk status back in March.
Rousseff, a left-leaning economist who is expected to run
for re-election in October, has promised to rein in spending to
meet this year's target and regain the confidence of investors
worried about the country's economic fundamentals.
Andre Perfeito, chief economist with Gradual Investimentos,
said next year's goal is not impossible, but the government
needs to show resolve to convince markets it can achieve the
"The lack of policy credibility has forced investors to be
much more cautious," Perfeito said in a note to clients.
(Reporting by Luciana Otoni and Bruno Federowski; Writing by
Alonso Soto; Editing by Chizu Nomiyama, W Simon and Jan Paschal)