Brazil Freezes $13.7 Billion From Budget to Meet Fiscal Goal

Brazil’s government has frozen 28 billion reais ($13.7 billion) in its 2013 budget as it tries to meet its primary surplus target, Finance Minister Guido Mantega said.

Officials did not freeze portions of the budget set aside for investments and hosting the World Cup soccer tournament, Mantega told reporters today in Brasilia. The government may increase abatements against this year’s fiscal surplus goal to 45 billion reais, Mantega said, up from February’s estimate of 25 billion reais.

President Dilma Rousseff’s administration this year is seeking to meet Brazil’s primary surplus goal of 155.9 billion reais without undermining economic growth. Authorities have extended tax cuts and increased spending to spur the economy, even as such measures have helped keep annual inflation near the 6.5 percent upper limit of the central bank’s target range.

Fiscal policy in the world’s second-largest emerging market has remained expansionary, central bank President Alexandre Tombini told lawmakers in Brasilia yesterday.

Brazil’s government will post a primary surplus this year of 2.3 percent to 3.1 percent of gross domestic product, Mantega said. Results will depend on tax collection, which are not expected to be “extraordinary,” the minister said today.

The government withdrew 12.4 billion reais from its wealth fund and discounted 34.9 billion reais in infrastructure investments from its primary surplus goal to meet its 2012 fiscal target.

Swap rates on the contract maturing in July 2013, the most traded in Sao Paulo today, were unchanged at 7.53 percent at 2:29 p.m. local time. The real fell 0.2 percent to 2.0450 per dollar.

Latin America’s largest economy will expand 2.98 percent this year, according to the latest central bank survey of about 100 economists. That compares to the central bank’s forecast for 3.1 percent growth.

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