Brazil Taps Into Sovereign Fund to Meet 2012 Fiscal Target

Brazil tapped into its sovereign wealth fund and state companies’ profits in an effort to meet its 2012 fiscal target.

The Treasury will withdraw 8.85 billion reais ($4.3 billion) from its sovereign wealth fund and 4.7 billion reais in dividends from state-owned bank Caixa Economica Federal, according to a Dec. 31 decision published in today’s official gazette.

President Dilma Rousseff’s administration last year cut taxes and stepped up public works spending as it struggled to revive an economy that the central bank estimates expanded by 1 percent. Tax breaks reduced federal revenue by 45 billion reais last year, according to Finance Minister Guido Mantega.

Latin America’s biggest economy targeted in 2012 a budget surplus before interest payments, known as the primary surplus, of 139.8 billion reais, about 3.1 percent of gross domestic product. In the first 11 months of the year, the primary surplus was 82.7 billion reais, or 69 percent of the goal.

As part of the efforts to meet the goal, the Treasury is also authorized to discount 25.6 billion reais in infrastructure spending from its target.

To contact the reporter on this story: Arnaldo Galvao in Brasilia at agalvao1@bloomberg.net.

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net.

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