Brazilian gov't announces tax rise, budget cuts to hit fiscal target

The Brazilian government announced on Wednesday a series of measures, including raising tax collection and cutting budgets, to compensate for a huge budget deficit.

The government announced a hole of 52.8 billion reals (16.94 billion U.S. dollars) in the federal budget for this year, and is trying to both cut costs and raise tax collection in order to meet the fiscal target set for 2017.

The hole in the budget is attributed to a significant fall in the estimates for the Brazilian economy's growth: the country is facing a recession which has already lasted two years, and has no end in sight.

Brazil's GDP fell 3.6 percent in 2016, prompting the administration to reduce the forecast for the 2017 growth from 1.6 to 0.5 percent.

Measures announced to tackle the budget deficit include a blockage of 42.1 billion reals (13.5 billion dollars) from the federal budget and a rise in payroll taxes, which is expected to raise 4.8 billion reals (1.54 billion dollars).

The government will also organize a new public bidding process for four hydroelectric power plants, which is expected to raise 10.1 billion reals (3.24 billion dollars). Endi