Brazil to cut budget by $6.7bn

Brazilian Finance Minister Guido Mantega said Friday that the government will trim its 2013 budget by 15 billion reales (or 6.7 billion U.S. dollars). Most of the cutbacks will be made to the current expenses of various government ministries, without affecting any social programs, said Mantega, adding the areas targeted for cuts include travel, equipment, third-party services and rents. The cut in expenses aims to help the government meet its primary surplus target of 2.3 percent of gross domestic product ( GDP) for the year, a figure that has been threatened by weak economic growth and fiscal benefits, said Mantega. The finance chief admitted he was concerned about the effects on the budget of several proposals currently being studied in congress, including the one calling for foregoing tax collection in the transportation sector to help bring down the price of bus fares. A wave of mass protests over the past few weeks was sparked by a transit fare hike that angered Brazilians who witnessed massive public spending on sporting events while public services went ignored. The primary surplus of the public sector takes into account the total savings made by the federal, state and municipal governments, and state companies, that are then put towards paying interests on debt. Balanced public accounts are considered a priority of the government at a time when capital flows to emerging countries are shrinking. The budget cutback comes just days before a scheduled meeting of Brazil's Central Bank Monetary Policy Committee (Copom), which will announce the new basic interest rate next Wednesday. According to most analysts, the rate is currently at 8 percent and is expected to be raised half a point.