* Law enacted in 2000, ended series of economic crises
* Government struggling to make 2012 fiscal target
SAO PAULO Dec 29 Brazil's government has
proposed changes to a fiscal responsibility law that set the
foundation for a decade of economic prosperity in Latin
America's largest economy, two local newspapers said on
The changes would make it easier for the government to cut
Brazil's high tax burden and enact other stimulus measures after
two years of slow economic growth, but they could also rattle
investors who fear President Dilma Rousseff has been too quick
to modify bedrock economic principles.
Changing part of the law enacted in 2000 would remove "the
shackles of economic policy," an unnamed source from the finance
ministry told Estado de Sao Paulo newspaper.
A finance ministry spokesman did not respond to an emailed
request for comment.
Rousseff's economic team included the proposed changes in a
bill aimed at fiscal reform at the state level on Friday, the
newspapers said. That day, the government also posted a deficit
of 5.5 billion reais ($2.7 billion) for November, jeopardizing
its ability to meet a closely watched annual fiscal target.
The government needs to post a primary surplus of 31.5
billion reais in December to meet the target, and on Friday
passed a decree that would allow it to dip into its sovereign
wealth fund if tax income is lower than expected this month.
Rousseff has dished out tax breaks and intervened in
state-run companies to cut electricity costs as she tries to
boost growth, but the measures have dragged down government
The fiscal responsibility law put an end to a series of
financial crises that rocked Brazil in the 1980s and 1990s.
Brazil's finances are much more solid now, but any change to the
text could unsettle investors.
At the same time her commitment to fiscal responsibility is
being questioned, Rousseff has been under pressure to make even
deeper structural reforms since economic growth slowed to a mere
0.6 percent in the third quarter of 2012.
Those efforts have drawn criticism from the TCU, a
government agency that audits public spending, according to
stories in Folha de Sao Paulo and Estado de Sao Paulo newspapers
The government believes altering the fiscal responsibility
law would remove such constraints. Congress will consider the
proposal after February, the papers said.
Despite slow growth and the increasingly unlikely fiscal
target, many aspects of Brazil's economy still seem healthy
compared to much of the developed world.
Unemployment remains near a record low, the debt to gross
domestic product ratio has fallen below that of the United
States and many European economies, and Rousseff is popular
among voters who believe the economy will eventually improve.