Brazil gets about $8.4 bln from tax deal in November
BRASILIA, Dec 5 (Reuters) - Brazil received about 20 billion reais ($8.42 billion) in November from a corporate tax settlement program, Finance Minister Guido Mantega said on Thursday, constituting an influx of extra cash that could help the government meet a key fiscal goal this year.
President Dilma Rousseff is relying heavily on billions of dollars in extraordinary revenues to make up for weak fiscal results, which has worried investors and raised the specter of a credit downgrade next year.
Brazil-based banks, insurance firms and companies with foreign units paid 20 billion reais to end a long-dated tax dispute with the government. Some companies agreed to pay all of their back taxes up front, while others chose to honor the bill in installments over several years with a hefty first payment.
Companies like mining giant Vale and pulp producer Fibria have said they took part of the back tax payment program known in Portuguese as Refis.
The settlement reduces the tax liabilities for these companies, but also swells their debt burden. For example, rating agency Standard and Poor's cut the outlook for Vale to negative because of the settlement.
Brazil's tax authority declined to give further details on the total amount of the settlement.
That cash plus a 15 billion real bonus from the 8-12 billion barrel Libra oilfield auction could help the central government meet its 2013 primary budget surplus goal of 73 billion reais.
The rapid erosion of Brazil's finances this year has set off alarms in the market, raising fears of a sovereign debt rating downgrade next year that could deter foreign investors and undermine a recovery in Latin America's largest economy.
Rousseff has promised to rein in on spending and roll back some tax breaks to replenish the state coffers. But this may pose a challenge as growth is anemic and Rousseff is up for re-election in October next year, which historically correlate with a loosening of the government's fiscal belt.
Her government has repeatedly lowered its annual goal for primary surplus, or excess revenues prior to debt payments, which the market follows as a key measurement of the country's capacity to repay its debt.
Still, it is very unlikely the government will be able to meet its 2013 overall public sector primary surplus goal of about 111 billion reais or the equivalent to 2.3 percent of its gross domestic product.
