Political Risk Latin America Blog @PolRiskLatam

Brazil: the spending cuts begin

Posted in News and Articles, Political Risk by politicalrisklatam on December 1, 2010

by Barney Jopson for Financial Times – Beyond Brics, December 1st.

Chop, chop. Is that the axe of austerity we hear? It’s not such a familiar tool in Brazil, but its finance minister has said he will cut by half funding for one big outlet for public money, the state development bank BNDES.

High public spending has kept Brazilian interest rates too high for many people’s liking and fiscal consolidation is a key priority for the minister, Guido Mantega, who has just been reappointed by president-elect Dilma Rousseff. His comments suggest he is wasting no time in getting down to it.

He told Bloomberg that he will halve the loans the government provides to BNDES from their 2010 level of R$104.7bn ($61.4bn). BNDES provides subsidised lending to industry and infrastructure projects. (continue reading… )



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