Brazil probably will raise fuel prices for second time Filed: 04/11/2000

By David Papadopoulos c.2000 Bloomberg News

Brasilia, April 10 (Bloomberg)  Brazil said it will probably raise oil prices for a second time this year to meet tax revenue targets even as international prices decline.

Brazil hopes to boost revenue as high global prices, which have retreated recently, erode tax receipts and threaten to cut into the 3.5 billion reais ($2 billion) income Brazil forecasts this year from its so-called oil account, said Amaury Bier, the Finance Ministry's executive secretary.

International prices would have to tumble or the government would have to make up for the tax revenue loss elsewhere for it to keep prices steady, he said.

"It'll be difficult" to keep prices at today's level, Bier said in an interview. "It's still possible, though, if we can add to revenue or reduce expenditures from other parts of the budget to make up for a shortfall in the petroleum surplus."

Brazil is trying to balance two goals as it monitors oil prices: Bolster revenue to cut into its budget deficit and prevent gasoline prices from surging to keep inflation in check.

The price for Brent crude oil would have to average $22.50 a barrel this year for the government to make its revenue target at today's domestic prices, he said. The Brent barrel was at $23.10 today after trading close to $30 earlier in the year.

"It's unlikely that prices will decline rapidly enough," he said. Bier said previously the government would decide in June whether another rise was needed.

A rise would follow a March 1 increase, which included a 7 percent gasoline price rise at refineries. The rise quickly led to higher prices at the pump, pushing prices in Brasilia up to around 1.3 reais per liter. The increase could have more than doubled the inflation rate in the month to 0.35 percent, or an annualized 4.3 percent, according to a Bloomberg News survey of 14 economists. The March inflation number is due out tomorrow.

http://www.bakersfield.com/oil/i--1256681598.asp

-- Martin Thompson (mthom1927@aol.com), April 11, 2000