RIO DE JANEIRO, BRAZIL – Reuters reports that two sources said on Monday that the Brazilian government plans to freeze a further R$5 (US$1.22) billion in spending as part of a periodic budget review, adding that official GDP growth estimates will be cut to 1.6 percent for 2019.
Brasília will unveil its second bi-monthly report on federal revenue and expenditure on Wednesday, with a fresh round of spending freezes needed because the country’s stagnant economy is reducing government revenues.
By law, the government must review its accounts every two months, specifying whether it should freeze or proceed with spending to meet its budget targets.
The administration’s first such report on March 22nd called for the postponement of R$30 (US$7.5) billion of spending initially planned for this year.
Brazil is not officially in recession, but with the economy likely having contracted in the first quarter, it may be halfway there.
Last week, Economy Minister Paulo said he expected growth of 1.5 percent in 2019, down from a previous forecast of 2.2 percent. However, the two sources said it would instead soon be cut to 1.6 percent.
Nonetheless, polls suggest the government’s projection may be far too optimistic.
Brazil’s economy is expected to grow by just 1.24 percent this year, according to a regular Central Bank survey published on Monday, the bleakest outlook so far this year.
That median forecast was down from 1.45 percent the week before, and well over a full percentage point down from 2.55 percent predicted in January.