Weekly Report - 23 April 2009 (WR-09-16)

The government of President Lula da Silva presented its draft budget plan for 2010, reducing Brazil's tight primary fiscal surplus target down to 3.3% of GDP, from 3.8% currently. Under the plans, the government will have further scope to reduce the target down to 2.8% of GDP. The government claims the move is necessary to allow it to prime domestic demand via continued public spending and potential further temporary tax reductions in order to ease the effects of the global economic crisis on the Brazilian economy. The opposition claims the move is politically motivated to allow Lula to avoid making tricky spending decisions ahead of next year's presidential election.