São Paulo – Brazil’s Ministry of Planning, Budget and Management and Ministry of Finance announced this Friday afternoon (19) in Brasília a BRL 23.4 billion (USD 5.8 billion) budget cut for this year. The goal is to cut spending and try to steer the country towards a primary surplus of 0.5% of Gross Domestic Product (GDP) this year. The surplus is spent on federal government debt interest.
BRL 4.2 billion (USD ) were slashed from the Growth Acceleration Program (PAC) and BRL 8.1 billion (USD 2 billion) were taken out of parliament amendments, i.e. funds made available for Congress and Senate members to roll out projects in their municipalities. While making the announcement, the government announced its revised GDP forecast for this year – a 2.9% reduction over 2015. Inflation is expected to be up 7.1% by the end of 2016. The upper threshold of the inflation target is 6.5%.
Despite the government’s efforts, financial players operating in the country believe the target of achieving a primary surplus this year will not be met. Firms polled by the Ministry of Finance expect a BRL 70.751 billion (USD 17.670 billion) deficit.
*Translated by Gabriel Pomerancblum
