2012-02-16

Brazil announces nearly US$32 billion in cuts to 2012 budget

BRASÍLIA, Brazil – Brazil’s government on Feb. 15 announced nearly US$32 billion in spending cuts to its 2012 budget but said social programs and major investments for the 2014 World Cup and 2016 summer Olympics would not be affected, Finance Minister Guido Mantega said at a news conference.

The cuts aim to ensure that Brazil can meet its target of a primary budget surplus of US$81 billion.

The primary budget surplus of a government is the surplus excluding interest payments on its outstanding debt.

Public debt in Latin America’s leading economy amounts to 36.5% of the gross domestic product, and Mantega said the goal is to bring it down to 35% at the end of this year.

The new cuts are higher than the US$30 billion slashed last year just after President Dilma Rousseff took office.

For 2012, the government had been banking on 5 % gross domestic product (GDP) growth, to be fueled by tax rebates and industry incentives as well as a cut in interest rates. An increase in the minimum wage on Jan. 1 to the equivalent of US$332 per month from US$294 also was expected to spark growth.

But a report from the economy ministry published Feb. 13 forecast lower growth of 4.5%.

The report says GDP growth should rise to 5.5% in 2013 and 6% in 2014, when the world’s sixth-largest economy is to host the World Cup.

The ministry also forecast that inflation should reach 4.7% this year, down from 6.5% last year.

[AFP (Brazil), 15/02/2012; Diariodecuiaba.com.br (Brazil), 15/02/2012]

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