(Agencia CMA Latam) - Ibovespa, the benchmark stock market index in Brazil, fell 0.6%, to 72,680.36 points, after the Supreme Court (STF) suspended a presidential decree that delays a pay rise to public workers.
The decision, which still needs to be confirmed by the Supreme Court next year, may cost at least R$ 5.1 billion to the cash-strapped Brazilian government in 2018. The expectation of approval of the tax reform in the United States prevented a sharper fall of the Ibovespa.
"The minister [Henrique] Meirelles noted that the wage adjustment next year could impact the public accounts by R$ 20 billion. I think that the government will not raise the fiscal target, so we may have more taxes coming ahead," said José Costa, the economist at Codepe Corretora.
According to Magliano Corretora analyst Pedro Galdi, the Justice Ricardo Lewandowski's decision left the national scenario hazier, as there are still doubts about whether the government will be able to pass a pension reform in February.
"Meirelles is trying to persuade rating agencies to wait until February, but no one knows if they will," Galdi said.
In the external scenario, Costa said the approval of the US tax reform, which happened near to the closing of the Ibovespa, could positively impact the index on Wednesday.
The locally traded U.S. dollar slightly fell by 0.03%, quoted at R$ 3,298. After trading lower at the beginning of the session and turning positive during the day, the greenback lost strength in the final stretch of business.
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