LatinNews Daily Report - 23 May 2013

ECONOMY | Cutting spending. On 22 May Brazil’s Finance Minister Guido Mantega announced spending cuts to the tune of R$28bn (US$13.7bn) in the 2013 federal budget in order to meet the government’s primary surplus target of R$155.9bn (US$76bn). Mantega said that the sections of the budget set aside for infrastructure investments; social programmes; and those related to the 2014 Football World Cup tournament would not be affected. Instead he said that the cuts would affect the general budgets of the ministries of cities, defence, and national integration. According to Mantega the “minimal” spending cut corresponds to the fact that the government had to adapt to the “reality” of lower-than-expected tax revenues resulting from the various tax breaks included in the government’s economic stimulus packages. Despite all these measures the expectation is for Brazil’s economy to continue to post underwhelming growth figures this year. Mantega also announced that the government was projecting annual GDP growth of 3.5%, down from the 4.5% laid down in the 2013 budget law. Meanwhile inflation is expected to reach 5.2%, up from the initial projection of 4.9%.

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