The same day, Nov 26, President Dilma Rousseff said that Brazil’s growth in 2012 was higher than previously reported, her finance minister, Guido Mantenga, divulged a raft of new fiscal measures. Taken together, this bolstering of Latin America’s largest economy seems like the unofficial kick off of Rousseff’s campaign for the presidential elections due to be held in October 2014.
In an interview with El Pais, the president said Brazil’s GDP for last year had been revised upwards to 1.5% from the 0.9% announced in March by the national statistics agency, IBGE. “This year,” she added, “we are going to grow rather more than 1.9%.” For his part, Mantenga unveiled plans that include the removal of some subsidies and tax breaks as well as a plan for the state development bank, BNDES, to stop funding lines for regional government starting next year. His goal is to keep Brazil’s fiscal policy on track and thus blow away rumors that a sovereign-debt rating downgrade could be looming.
Rouseff’s economic optimism – while part and parcel of any political campaign – will face a test on December 3 when IBGE presents the third-quarter economic growth figures. The national statistics agency hasn’t yet confirmed the revised 2012 figure, though its likely to do so then. Brazilian law says that the IBGE can’t inform government officials about economic data until the morning of its release. The government later on Nov 26 confirmed that Rousseff’s revision was based on preliminary figures from the finance ministry. The IMF kept unchanged its 2.5% growth forecast for Brazil this year though it reduced its 2014 estimate to 2.5% from 3.2% in its latest World Economic Outlook.
Mantenga is confident that Brazil’s public sector accounts will begin to show improvements in 2014 – in perfect time for the elections. He estimated that the central government would reach its 2013 primary budget surplus goal of 73 billion reais ($31.85 billion) while states and municipalities will save between 23 billion and 26 billion reais. Mantenga also announced that funding to industry through the BNDES would likely fall to around 150 billion reais in 2014 from 190 billion reais this year.
Brazil’s government deficit as a percentage of gross domestic product increased to 3.3% in September, its largest since 2009, the central bank said in October. Both politicians know it is time to act to get that number down — and want to be sure they take action in time for the upcoming elections.