Brazil's Temer says leaving budget deficit under 130 billion reais

BRASILIA (Reuters) – Brazilian President Michel Temer said on Thursday his government will leave a primary budget deficit of less than 130 billion reais ($33.3 billion) when he hands over the reins to President-elect Jair Bolsonaro on Jan. 1.

Temer told reporters that Brazil could take up to 10 years to balance its federal budget. He urged Congress to pass his proposal for a minimum retirement age to advance the pension reform that his successor will inevitably have to tackle.

Due to an increase in the population’s age and the number of retirees, Brazil’s generous pension system is becoming a bigger chunk of the country’s budget deficit. Investors and credit rating agencies are watching how the matter is dealt with because it is adding to a mounting public debt.

The deficit could end this year some 20 billion to 25 billion reais below target, according to Temer’s estimates.

Temer said he expects Bolsonaro’s incoming government to follow its fiscal austerity policies and maintain a spending ceiling, which was his main achievement toward putting Brazil’s accounts in order during his two-and-a-half years in office.

“I think the Bolsonaro government will succeed,” he said, noting that the president-elect, who was elected in October without the backing of Brazil’s traditional parties, has begun to reach out to congressional caucuses to back his agenda.

Temer took issue with Bolsonaro’s anti-globalist foreign policy views, such as his threat to follow U.S. President Donald Trump’s example and pull Brazil out of the Paris Climate Agreement.

That move, along with a plan to switch the embassy in Israel from Tel Aviv to Jerusalem, has met with resistance from Brazil’s powerful agribusiness sector that is concerned with losing markets in Europe and in Arab nations.

“I believe the Paris Agreement is very important. I think the elected government is gradually coming around to understanding that,” Temer said.

At age 78, Temer plans to retire from politics and return to his law practice. He will also likely need to defend himself from accusations in several graft cases once he loses his presidential immunity.

“I am not in the least worried about the accusations. Any bright legal mind can see that they are groundless,” he said.

The former vice president, Temer took over in 2016 from Workers Party President Dilma Rousseff when she was removed from office in a controversial impeachment. He set about restoring political stability and pulling Latin America’s largest economy out of its worst recession.

“I have no regrets. I did what I had to do. I did what I thought was best for the country,” Temer said.

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