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Budget cut to ensure Brazil's fiscal health: finmin

English.news.cn   2014-01-29 10:15:09

RIO DE JANEIRO, Jan. 28 (Xinhua) -- Brazilian Finance Minister Guido Mantega on Tuesday confirmed that the government will cut the 2014 federal budget, saying the move is to ensure the country's fiscal health.

The budget was originally set at 2.49 trillion reals (1.02 trillion U.S. dollars), but the O Globo daily reported that it might be slashed by as much as 30 billion reals (12.4 billion U.S. dollars).

Mantega declined to say how large the cut would be, but stressed that the adjustment, to be officially announced in February, "will maintain fiscal solidity and the stability of the public debt."

The minister also confirmed that the government is consulting with the market to determine the size of the cut, but added that the government is "always in contact with the market."

Commenting on Brazil's current volatile exchange rates, Mantega attributed the fluctuations to the U.S. Federal Reserve's decision to reduce stimuli and the deceleration of China's economic growth.

With China being Brazil's largest trading partner, a "slight adjustment" in China's economic growth is expected to lead to a lower demand for commodities and affect exchange rates in Brazil, said Mantega.

Since the beginning of the year, the Brazilian real has slipped 2.97 percent against the dollar, to land at 2.42 reals to the dollar on Monday.

Mantega stressed that the exchange-rate volatility is temporary and does not present a risk, as "Brazil has ... large foreign currency reserves" and "a smaller external debt" than other, more vulnerable countries.

In separate news, a study of Brazilian spending habits released Tuesday by the Credit Protection Service (SPC) and the national Shop Owners' Association showed that most Brazilians lack fiscal discipline.

According to the study, which surveyed 656 people in Brazil's state capitals, some 71 percent of those queried said they had only "partial control" of their finances, while 10 percent said they had little or no control and one percent declined to answer.

SPC representative Luiza Rodrigues, to whom Brazilians in general are ill-prepared to deal with their finances, said "those who pay their bills on time adopt more cautious and conservative practices, no matter the class to which they belong."

Saving money is not a widespread habit, either, with 42 percent saying they had no money saved for emergencies, and 56 percent saying they failed to save any money last month.

The SPC concluded that Brazilians are prone to purchasing on impulse, even when they cannot afford the products.

Editor: Mengjie
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