Brazil announces $30 billion budget cuts

Brazil announces $30 billion budget cuts

2011-02-10 07:51:12 GMT+7 (ICT)

BRASILIA, BRAZIL (BNO NEWS) -- Brazil Finance Minister on Wednesday announced a $50 billion reais ($30 billion) budget cut for 2011 in order to reduce expenditures and curb inflation.

According to the state-run Agencia Brasil, Finance Minister Guido Mantega said that the major budget cut includes the removal of all stimulus packages introduced to combat the 2008-2009 crisis.

Montega assured that an external audit to verify the administrative costs in 2011 will be hired. However, social and infrastructure projects will not be affected by the budget reduction.

Brazilian President Dilma Rousseff said that she inherited government plagued with financial problems. She said that the budget cut was caused by the high expenditure recorded during the 2010, the last year of the former President Lula da Silva's term.

The $50 billion reais ($30 billion) cut represents a 1.25 percent of the projected gross domestic product (GDP) for 2011 and was the minimum necessary to achieve its 2011 surplus target. The budget cut will be detailed next week.

Brazil is the largest economy of Latin America. In 2010, it recorded a 7 percent growth and is expecting to grow 5 percent this year. The South American country had a 5.91 percent of inlfation and is expected to remain similar this fiscal year.

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