The Brazilian government is taking steps to ensure 2013 starts with an “elevated level of investment,” even after congress failed to approve next year’s budget, President Dilma Rousseff said.
With the budget vote delayed until Feb. 5, regulations only allow the government to spend for essential functions such as salaries. To remedy that, Rousseff will sign a decree freeing up one-third of the amount earmarked in the budget for investment over the course of the year. The measure has the force of law unless Congress overturns it.
The measure means that “there’s no chance of interrupting the pace of investments in Brazil,” Rousseff told reporters in Brasilia today. “The government’s goal is to start the year with an elevated level of investments.”
The country will also prioritize growth by expanding tax cuts, encouraging banks to make more long-term loans and improving infrastructure, Rousseff said. The world’s second-biggest emerging market will benefit from accelerating economic activity in the U.S. and China, she said.
Brazil’s interest rates and foreign exchange levels are entering a phase of stability, Rousseff said, adding that the country needs interest rates compatible with the rest of the world.
“Improving competitiveness is something we are going to have to do permanently,” Rousseff said. “We took a step in that direction this year with cuts in interest rates.”
Brazil’s central bank on Dec. 20 lowered its forecast for 2012 gross domestic product growth to 1 percent, after the economy expanded half the pace of analysts’ forecasts in the third quarter on the fifth consecutive drop in investments. Still, Latin America’s largest economy is set to grow 4 percent next year, Finance Minister Guido Mantega said this month.
“I have done the possible and the impossible for GDP to grow the most possible” this year, Rousseff said.
Brazil will begin holding auctions for shale gas concessions in 2013, Rousseff said. The electric power industry should be relentless in preventing power outages, and the government plans to increase investment in maintenance of the electric system, she added.