(Adds details from news conference)
By Silvio Cascione
BRASILIA, Sept 22 (Reuters) - The Brazilian government freed up 12.8 billion reais ($4.1 billion) in spending this year to avoid a potential shutdown, the Planning Ministry said on Friday, taking advantage of a looser budget target announced last month.
The decision reduced the official spending freeze from an original 45 billion reais to 32.1 billion reais and was in line with the outlook for fiscal loosening between 10 billion and 15 billion reais given by a government source on Thursday.
President Michel Temer’s administration has struggled to meet its self-imposed budget targets through spending cuts and tax hikes as the economy slowly recovers from its worst recession on record. Last month, the government loosened the 2017 primary budget deficit goal to 159 billion reais from 139 billion reais previously.
Planning Minister Dyogo Oliveira told a news conference the government could free up more spending this year, depending on revenue estimates, adding that the current 2017 budget target is not at risk.
The government maintained its forecast for economic growth of 0.5 percent in 2017, taking a more cautious stance than the central bank, which upgraded its growth forecast to 0.7 percent on Thursday.
The unfrozen spending, announced at the bimonthly budget review, took into account an increase of 2.9 billion reais in revenue estimates from private concessions this year. It also took into account 8.8 billion reais in revenue from a tax renegotiation program known as Refis.
$1 = 3.13 reais Reporting by Silvio Cascione; Editing by Jonathan Oatis and Alistair Bell