Brazil raises primary surplus target

Brazil raises primary surplus target

Brazilian Finance Minister Guido Mantega said Monday that the government will raise the primary surplus target for Y 2011 to minimize the effects of the Global financial crisis.

The surplus will be raised from 117.8 to 127.8-B Reais (US$73.6 to 79.9-B), representing some 3.3% of the nation’s GDP.

In the 1st 7  months this year, Brazil’s primary surplus amounted to 92-B Reais (US$57.5-B).

“We are taking precautions against a possible escalation of the crisis to prevent Brazil from suffering the same fate as the affected countries,” Mantega said. “We want Brazil to continue in a path of development with minimum damage from the International crisis.”

According to the minister, the measure will not compromise the investments or the budget of the government’s social programs. The cuts will be made in the central government. Local governments and state-owned companies will not undergo any budgetary contraction.

Mantega also said the measure is part of a strategy to create the conditions for the Central Bank’s Monetary Policy Committee (Copom) to cut back the country’s annual basic interest rate Selic.

The Selic rate is currently at 12.5%. The Copom will meet Wednesday to decide if the rate should be changed.

Paul A. Ebeling, Jnr.