Levy suggests “fiscal sustainability bridge” to overcome crisis

Finance Minister Joaquim Levy said on Thursday (Sep. 10) that the government needs to build a “fiscal sustainability bridge” in order to go through the current moment with balanced accounts and spending, and hit the primary surplus target of 0.7% of the gross domestic product in 2016. Without further detail, the minister reported that a series of measures should be announced by the end of September.

“The government made the decision to submit the budget with a deficit to make clear the need to find a way out quickly so as to ensure that the budget is in line with the Law of Budgetary Guidelines, i.e., 0.7% of the GDP, as the presidency has already explained a few times. The method for meeting that goal will be found as a result of this consultation we're holding in Congress,” Levy said, during a press release at the Ministry of Finance.

Joaquim Levy called journalists to talk about the Standard & Poor's cut in its credit rate for Brazil from BBB- (medium investment grade) to BB+ (junk).

In Levy's judgment, the agency's decision was politically biased. The minister noted that, in 2011, Standard & Poor's slashed its credit rating for the US, which were having difficulties with their debt and budget gap at the time. “One cannot fail to remember the stance of [S&P] in the US back in 2011. There was a lack of willingness to increase the American debt. No agreement could be reached between the Executive and the Legislative branches. On that occasion, this agency made a political evaluation, just as it did here, saying there would be difficulties reaching the necessary objective,” Levy said.

Translated by Fabrício Ferreira

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