The decrease is due to the exclusion of Petrobras from the calculation

he 2010 Bill on Budgetary Guidelines (LDO) provides for a reduction on the primary-surplus goal – which corresponds to the savings of public sector targeting the payment of interests of public debt – to 3.3% of GDP. The bill was forwarded to Congress by the government.

That decrease is due to the exclusion of Petrobras from the calculation of that goal, which produces a difference of half a percentage point. Thus, the company will have an additional R$14.9 billion to invest. “Central government [National Treasure, Central Bank and Social Security is making the same effort; only Petrobras will be excluded from that calculation”, stressed the Ministry of Finances, Guido Mantega, in a press conference on last Wednesday at the Ministry of Planning.

Petrobras
Moreover, the government is preparing a bill to amend the 2009 LDO. Their intention is to reduce the primary-surplus goal, from the current 3.8% to 2.5% of GDP, because of the exclusion of Petrobras and the smaller fiscal effort by central government (-0.75%), by the states and municipalities.

Mantega explained that the reduction of that goal will be used to encourage the resuming of economy growth, since the government’s collection has been dropping: “This year, we will concentrate anti-cyclic politics: investments increase; actions encouraging economy; tax disencumbering; and housing programs. All that will decrease our tax room.”

According to the Ministry of Planning, Paulo Bernardo, this year’s drop in primary surplus will give to the Union extra unallocated funds of around R$22 billion. “The current forecast is that we will have to lose around R$48 billion in collections, compared to what had been planned. We will also have additional expenses, such as subsides for the housing program, assistance to municipalities and some budgeting credits which we will have to clear. Thus, it does not mean additional cash, but simply a calculation that is made so that our cash keeps its balance”, he explained.

Growth
The 2010 LDO bill forecasts the resuming of economy growth. The forecast for GDP growth is 4.5%, compared to 2%, of this year. The inflation forecast remained 4.5%. The salary-mass growth is estimated in 9.19%, compared to 6.29% of 2009. The primary revenue forecast is R$816.7 billion, and expenses, R$744.1 billion.

The Ministry of Planning, Paulo Bernardo, said that the adjustment policy on the minimum wage will not be changed. “It will be adjusted according to the inflation of this year, plus the economy growth in 2008, which was 5.1%, but which can also be reviewed. According to the data we currently have, including the inflation forecast, we can assess that the minimum wage will be around R$507 in 2010, from January on.”

Bernardo informed that new increases in wage adjustments of civil servants are not forecast. According to him, what has already been voted by the Congress will be maintained for now.

Report - Marise Lugullo/Rádio Câmara
Editing - João Pitella Junior
Translation – Positive Idiomas Ltda