Government Assessing Ways to Cut Spending by US$23 Billion

05/18/2015 - 11h01

In a meeting on Sunday (17) at her official residence, the Palácio da Alvorada, President Rousseff was told by her economic team that "it would be hard for budget cuts to be less" than US$23 billion (R$70 billion).

According to advisors, this value is "very close to what is required" to guarantee a primary surplus (a positive balance once expenses are subtracted from revenue) this year. The cut of US$23 billion would mean returning to 2013 spending levels, as Finance Minister Joaquim Levy has argued.

The President will have the final decision, and will meet with her allies on Monday (18) to discuss the issue. The meeting will be chaired by Vice-President Michel Temer.

Rousseff is under pressure from her political allies to cut nearly US$20 billion (R$60 billion) in order to prevent government paralysis.

However, her economic team would prefer to see a cut of US$27 billion (R$80 billion), due to alterations Congress is making to the program of fiscal adjustment. These changes have already reduced potential savings by nearly US$1.3 billion (R$4 billion).

To achieve a budget surplus, there are at least four possible strategies Rousseff may implement this year: the sale of stocks from the insurance sector of public bank Caixa; tax rises; an auction for oil extraction rights and reducing the public sector payroll.

Chief-of-Staff Aloizio Mercadente, Minister of Planning Nelson Barbosa and Finance Minister Joaquim Levy were all present at Sunday's meeting, which lasted nearly four hours.

Translated by TOM GATEHOUSE

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	Pedro Ladeira/Folhapress
	Finance Minister Joaquim Levy was present at Sunday's meeting, which lasted nearly four hours