BRASILIA (Reuters) -Brazil’s government forecast on Wednesday that this year’s primary deficit will be significantly below the official target, helped by a jump in expected tax revenue.

The Finance and Planning Ministries projected a primary budget deficit of 107.6 billion reais ($20.6 billion) for the central government this year, equal to 1.0% of GDP, according to their first 2023 bi-monthly revenue and expenditure report.

The forecast is significantly below the target primary deficit of 228.1 billion reais set by the annual budget law for the central government, which includes Brazil’s Treasury, central bank, and Social Security.

It also meets the expectation highlighted by Finance Minister Fernando Haddad to close the year with a deficit equal to or below 1% of GDP, unveiled after he presented in January a plan of spending cuts and revenue-raising measures, including the resumption of fuel taxes that he convinced new leftist President Luiz Inacio Lula da Silva to embrace.

Later on Wednesday, Treasury Secretary Rogerio Ceron said at a news conference that a primary budget deficit below 100 billion reais in 2023 is possible, and that the government will enter 2024 seeking for fiscal balance.

The improvement was driven by an increase of 110 billion reais in estimated net revenues for this year, primarily due to the expectation of higher tax collection.

Regarding expenses, the government reduced by 10.6 billion reais the expenditures calculated in the budget law.

This year’s public accounts are expected to reverse the central government’s primary surplus recorded in 2022, the first in nine years, with the deficit deepened by a massive spending package that Lula got Congress to approve.

The package breaches the constitutional spending cap to increase social expenses and meet campaign promises.

The government has already committed to presenting a new fiscal anchor to signal fiscal sustainability, but Lula has postponed the announcement of the much-awaited rule to April.

($1 = 5.2186 reais)

(Reporting by Marcela Ayres; Editing by Leslie Adler, David Gregorio and Diane Craft)

By Michael S. Derby

(Reuters) -Federal Reserve Chair Jerome Powell said on Wednesday the sharp reversal of the central bank’s effort to shrink the size of its balance sheet in the wake of the collapse of Silicon Valley Bank does not mean it is using its holdings to provide renewed stimulus to the economy.

“The balance sheet expansion is really temporary lending to banks” and “it’s not intended to directly alter the stance of monetary policy,” Powell said at his press conference following the Federal Open Market Committee meeting.

Last week, a surge of borrowing by banks, most notably via a record $153 billion in lending via the discount window, caused the Fed’s overall stockpile of cash and bonds to leap from $8.4 trillion on March 8 to $8.7 trillion as of one week ago. That unraveled months of efforts to reduce the size of the Fed’s footprint in bond markets.

The Fed’s balance sheet, fueled by aggressive buying of Treasury and mortgage debt as a form of stimulus initiated in the wake of the onset of the coronavirus pandemic, topped out last summer at just shy of $9 trillion.

Since last fall the Fed has been allowing just short of $100 billion per month of bond holdings to expire and not be replaced, allowing its balance sheet to shrink. That effort complemented aggressive rate rises aimed at lowering high levels of inflation.

The Fed raised rates again by a quarter percentage point on Wednesday and signaled that while the banking sector stresses are clouding the outlook, official have penciled in one more 25 basis point increase this year.

It’s unclear whether the emergency bank borrowing will stay high or ebb. But in his comments Wednesday Powell said officials are not currently contemplating any changes in the core effort of reducing holdings.

“We haven’t really talked about changing the balance sheet implementation,” Powell said, although he added “we’re always willing to change that if we believe it’s appropriate.”

Fed holdings surged last week due to record discount window lending to banks and other credit extensions that happened in the wake the collapse of Silicon Valley Bank.

(Reporting by Michael S. Derby, Editing by Franklin Paul and Andrea Ricci)

By Fergal Smith

(Reuters) -Canada’s benchmark stock index fell on Wednesday, giving back some of its gains in recent days, as investors assessed the Federal Reserve’s latest interest rate hike and signal that its tightening campaign is nearing an end.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 122.14 points, or 0.6%, at 19,532.78. On Tuesday, the index posted its highest closing level in one week.

Wall Street also ended lower after the Fed delivered a widely expected 25 basis point policy hike, while hinting it was on the verge of pausing future increases in view of recent turmoil in the financial sector.

“This is a Fed meeting that has gone pretty much on plan,” said Greg Taylor, a portfolio manager at Purpose Investments.

“People have been concerned about the banking system and that is something that we can move on from and maybe go back to looking at earnings which is the next big thing for the market to focus on.”

The energy group fell 1.4% even as a weaker U.S. dollar helped support oil prices. U.S. crude oil futures settled 1.8% higher at $70.90 a barrel.

Heavily weighted financials also lost ground, falling 0.8%, while technology ended 1.1% lower.

The materials group, which includes precious and base metals miners and fertilizer companies, was a bright spot. It climbed 0.8% as the price of gold rose.

Activist investor Engine Capital urged Parkland Corp to look at strategic options, including the sale or spinoff of non-core assets, to become a more focused fuel and convenience retailer, sending its stock 9.7% higher.

(Reporting by Fergal Smith; Additional reporting by Johann M Cherian in Bengaluru; Editing by Shweta Agarwal, Paul Simao and Richard Chang)

(Reuters) -Albemarle Corp said on Wednesday it had chosen Chester County, South Carolina, as the location for a $1.3 billion lithium processing plant it hopes will cement its status as a cornerstone of the rapidly growing U.S. electric vehicle industry.

The facility, which was first announced last year without a specific location, will double the company’s lithium processing capacity and thus its ability to supply key customers – including Tesla Inc – who are hungry for more North American supplies of the battery metal.

Already the world’s largest lithium producer with major facilities in Chile, China and Australia, Albemarle has moved aggressively to expand in the United States, which it sees as its next major area of growth thanks to tax credits and other incentives offered by the U.S. Inflation Reduction Act.

The South Carolina plant will be able to process 50,000 tonnes of lithium each year from rock Albemarle plans to mine in North Carolina as well as from recycled batteries. That’s roughly enough of the white metal to make 2.4 EVs annually.

“This facility will help increase the production of U.S.-based lithium resources to fuel the clean energy revolution while bringing us closer to our customers as the supply chain is built out in North America,” Albemarle Chief Executive Kent Masters said in a statement.

Construction of the 800-acre project is expected to begin late next year, though the company did not provide a timeline for when the site will open. The plant should employ 300 workers with an average annual pay of $93,000.

The company received a lithium processing grant last year from the White House. Despite the recent softening in lithium prices, Albemarle has said it expects demand to continue to rise.

Shares of the Charlotte, North Carolina-based company fell 1.6% to $219.33 in afternoon trading.

(Reporting by Sourasis Bose and Arunima Kumar in Bengaluru and Ernest Scheyder in Houston; Editing by Anil D’Silva, Vinay Dwivedi and Diane Craft)