Investors unfazed by wider fiscal deficit outlook in Brazil

Investors unfazed by wider fiscal deficit outlook in Brazil

Chamber Articles Category: Economic News Post Date: 08/11/17 Source: Reuters By: Bruno Federowski and Silvio Cascione
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When former Brazilian President Dilma Rousseff's government repeatedly missed its fiscal targets, investors fled the country. Now that her successor, Michel Temer, seems poised to do the same, financial markets appear unperturbed.

Finance Minister Henrique Meirelles is expected to announce in the coming weeks a wider budget deficit goal for 2017 as a slower-than-expected economic recovery causes tax revenue to fall short of government expectations.

Brazil is currently targeting a deficit of 139 billion reais ($44.4 billion) before interest payments.

Investors and analysts say the likely revision would only mark a blip in an otherwise solid trajectory toward fiscal austerity that has restored optimism in Brazil, Latin America's largest economy.

"Markets are willing to accept worse short-term fiscal conditions if the long-term outlook seems solid, as currently looks to be the case," said portfolio manager Marco Bismarchi, who helps to manage 3.3 billion reais worth of assets as partner of São Paulo-based TAG Investimentos. Read Full Article