Brazil opts not to raise taxes to meet 2017 fiscal goal

August 31, 2016 8:29 PM EDT

Brazil's new President Michel Temer reacts during the presidential inauguration ceremony after Brazil's Senate removed President Dilma Rousseff in Brasilia, Brazil, August 31, 2016. REUTERS/Ueslei Marcelino

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BRASILIA (Reuters) - Brazil's newly confirmed President Michel Temer submitted to Congress a 2017 national budget that limits spending as promised but steers clear of tax hikes that analysts say are needed to quickly rebalance the country's depleted fiscal accounts.

In the budget, his government raised its estimate for tax revenues by 26 billion reais ($8.06 billion) and its estimate for revenues from concessions and privatizations by 18.4 billion reais, in order to close a financing gap.

The government made only modest budget cuts of just over 5 billion reais, relying on a rebound in the economy to raise enough revenues to meet its primary deficit goal for 2017.

The government set a primary deficit goal of 163.9 billion reais, or the equivalent of 2.6 percent of gross domestic product (GDP).

Temer, confirmed to the post with the impeachment of Dilma Rousseff on Wednesday, has vowed to rebalance public accounts to get Brazil out of its worst recession in decades.

The rapid deterioration of government finances after years of heavy spending and big tax breaks cost Brazil its coveted investment-grade rating.

Planning Minister Dyogo Oliveira said the government expects the country's gross debt to end this year at 72.5 percent of GDP and rise to 77.7 percent in 2019. The gross debt its currently 69.5 percent of GDP.

($1 = 3.2259 Brazilian reais)

(Reporting by Alonso Soto; Editing by Bill Rigby)

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