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BRAZIL: Treasury Secretary Ceron Says New Budget Freeze Could Be Announced

BRAZIL
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  • Treasury Secretary Rogerio Ceron has said that the government could announce a new budget freeze to meet this year’s fiscal target, according to a report in O Globo. Ceron said that an announcement could be made next week, and that a freeze of BRL5bn should be sufficient to meet the target, as he warned about the increase in mandatory spending this year.
  • This would come on top of a BRL15bn freeze that has already been announced for the 2024 budget and follows a separate report in O Estado de S. Paulo highlighting the shortfall of tax revenues relative to government projections this year. The government has said it expects a better performance in H224, supported by factors such as the BRL10bn extraordinary dividend from BNDES.
    • BRL has come under pressure today, amidst broad-based weakness in regional currencies, with USDBRL currently up by around 0.6% at 5.62. Bullish conditions in USDBRL remain intact, with attention on 5.7422, the 76.4% retracement of the Aug 5 - 19 downleg. Firm support to watch is 5.5299, the 50-day EMA.
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  • Treasury Secretary Rogerio Ceron has said that the government could announce a new budget freeze to meet this year’s fiscal target, according to a report in O Globo. Ceron said that an announcement could be made next week, and that a freeze of BRL5bn should be sufficient to meet the target, as he warned about the increase in mandatory spending this year.
  • This would come on top of a BRL15bn freeze that has already been announced for the 2024 budget and follows a separate report in O Estado de S. Paulo highlighting the shortfall of tax revenues relative to government projections this year. The government has said it expects a better performance in H224, supported by factors such as the BRL10bn extraordinary dividend from BNDES.
    • BRL has come under pressure today, amidst broad-based weakness in regional currencies, with USDBRL currently up by around 0.6% at 5.62. Bullish conditions in USDBRL remain intact, with attention on 5.7422, the 76.4% retracement of the Aug 5 - 19 downleg. Firm support to watch is 5.5299, the 50-day EMA.