SAO PAULO--Brazil's government is ready to cut spending, if necessary,
to meet its primary budget surplus target for this year, Finance
Minister Guido Mantega said in an interview published Wednesday by the
Folha de S. Paulo newspaper.
"We will make additional adjustments on the spending side, as needed,"
he said. "We are going to reach the target of a primary surplus equal
to 2.3% of gross domestic product. This is a firm government target."
According to most economists, additional spending cuts will be necessary for Brazil to meet that goal.
In April, the most recent figure available, the country posted a
12-month primary budget surplus of 85.80 billion Brazilian reais ($40.5
billion), or the equivalent of 1.89% of gross domestic product. That was
down from BRL89.70 billion, or 1.99% of GDP, reported in March.
Regarding the recent appreciation of the U.S. dollar versus the
Brazilian real, Mr. Manetga said volatility is likely to persist. As of
Wednesday morning, the real was trading at BRL2.13 to-the-dollar. At the
beginning of the year, the real was stronger at BRL2.05.
"I don't know if the recent depreciation of the Brazilian real is here
to stay," he said. "But, one way or the other, we are prepared for it."
He noted that, in the event of any abrupt additional depreciation, "We
have high foreign reserves."
The Brazilian real declined against the dollar in recent weeks in
tandem with other currencies, especially those of commodities producing
countries. The dollar rallied amid talk the U.S. Federal Reserve Board
will curtail its asset-buying program.
Brazil's foreign reserves stood at $375 billion as of Friday, according to central bank data.
Mr. Mantega also commented on Brazilian inflation, now running at a worrisome 6.5%.
He said, "Monetary policy is the main tool for controlling inflation."
Brazil's central bank has raised interest rates twice so far this
year. The base rate stands currently at 8.0%, up from 7.25% at the
beginning of 2013.
Write to Rogerio Jelmayer at rogerio.jelmayer@dowjones.com.
June 12, 2013, 8:58 a.m. ET
http://online.wsj.com/article/BT-CO-20130612-705108.html
About Me
- Waldemar Jezler
- For over 30 years, Brazilian-American investment banker Waldemar Jezler has worked in the finance sector. Jezler earned his Bachelor's degree in Civil Engineering from the University of São Paulo in Brazil and then went on to attend Harvard Business School for his MBA. While at Harvard, Jezler was highly involved in extracurricular activities, including a term as President of the Ibero American Club.