Henrique Meirelles, Brazil's embattled Finance Minister, is continuing to resist to accede to demands for tax breaks. It is not helping the President Michel Temer is struggling to gather support. The Brazilian Government is embroiled in a tough financial crisis. Meirelles has shown reluctance to surrender to demands made by his own government.
Few money, political turmoil
The finance minister has a lot on his plate. Civil servants have urged him to make bigger tax exemptions. Farmers have demanded a waive off on back taxes. Cabinet ministers are pressuring him for cash to spend on infrastructure projects.
For Brazilian President Michel Temer, his chances of surviving the present political turmoil has increased significantly after the top electoral court in Brazil had acquitted him of charges related to the 2014 election campaign. The president, however, continues to be stuck in one scandal after another. He is also extremely unpopular. Investors are now wary of his ability to push forward a reform agenda which must be investor friendly as well. The president has offered a number of fiscal sweeteners during the last few weeks. His policies have been torpedoed by the dismal state of the Brazilian economy, with the Ministry of Finance loath to loosen the purse strings.
The budget deficit in Brazil is presently at 9.2 percent of the country's total GDP. To make it more worse, two well-known credit ratings agencies have downgraded their outlook on the sovereign ratings of the nation. Their rationale is that the extended political uncertainty has paralyzed the fiscal adjustment of the Brazilian economy. Economists have predicted that the government has more than an even chance to miss its own fiscal targets in 2017.
The president and his own finance ministry has clashed over a number of issues. One of them is Funeral, the fund for rural workers'. Finance Minister Meirelles have declined to fully waive the back taxes which are owed by farmers. This is despite the intense pressure mounted by the president himself. Yet another point of contention is Avancar. This is a new infrastructure program set to be announced in the near future. The finance ministry has given a lukewarm response to such a proposal.
The Brazilian Finance Ministry has allocated three billion reais or $900 million to assist the government in its discretionary spending. Not much room, however, exists for manipulating the 2017 budget sans extra revenue.