Government sets budget freeze of R$55 billion

Brazil's government will freeze R$55 billion in approved spending from its 2012 budget as part of an effort to guarantee compliance with its public-sector savings target, the government said Wednesday.

The figure was greater than the R$50.6 billion frozen at the beginning of last year. Market estimates had put the freeze at between R$50 billion and R$70 billion.

"This is an elevated amount, but it is going to guarantee compliance with the primary surplus target that we promised," said Finance Minister Guido Mantega following the declaration of the number. Brazil has set a public-sector surplus target of R$139.8 billion for this year.
   
Mantega said the measure was essential to help cut public-sector debt and local interest rates, and yet public-sector investment and social spending would be preserved.
   
The budget freeze included R$35 billion in mandatory spending and R$20 billion in discretionary spending. The measure was based on a revised revenue estimate of R$1.09 trillion from previously projected revenue of R$1.3 trillion.