Brazilian gov’t announces major budget cut

The Brazilian Planning Ministry announced Thursday that it would cut the budget for 2010 by 21.8 billion reais (12.24 billion U.S. dollars) to make up for tax decrease.

The cut is the highest since President Luiz Inacio Lula da Silva took office in 2003.

The tax revenue for 2010 is expected to total 529.6 billion reais (297.52 billion dollars), 28.1 billion reais (15.79 billion dollars) short of the Congress’s earlier estimate.

“We have the collection of January and February and we are adjusting the projection,” said Planning Minister Paulo Bernardo.

The mandatory expenditures may rise 1.43 billion reais (803 million dollars) from the Congress’ initial estimates, reaching 170.64 billion reais (95.86 billion dollars) and the discretionary expenses are expected to fall from 195 billion reais (109.5 billion dollars) to 173.2 billion reais (97.3 billion dollars), Bernardo said.

The government cut the budget so as to reach the primary surplus target, which currently accounts for 3.3 percent of the country’s GDP and it may adjust the cuts if the country manages to achieve the target during the year.