Brazil budget 2012 is basically a guideline for public expenditure as opposed to being mandatory as is the case with several other countries. The government has the right to spend till the maximum limit but it has no obligation to do the same.
Highlights of Brazil Budget 2012:
The Brazil budget 2012 will see 5 percent growth in the GDP. There will be increased revenue as well.
It is being assumed that this surge will assist the government in increasing its expenses by 10 percent in the upcoming fiscal. Economists had previously stated that Brazilian economy will grow by 3.9 percent.
As per the proposed budget inflation rate could reach the 4.8 percent mark in 2012 fiscal.
The targeted primary budget surplus for 2012 fiscal is 114 billion reals. This amount will be equivalent to 2.5% of the gross domestic product. In 2011 this sum is supposed to amount to 128 billion reals.
Tax revenues are expected to go up by 7 percent in 2012 fiscal. This could, though, lead to a fresh series of budget cuts in 2012.
The Budget Minister of Brazil, Miriam Belchior has stated that the actual Brazil budget 2012 will be more restrained than what has been proposed.
The national government has earmarked 165.3 billion reals for investment in 2012.
The money will be contributed by the various ministries, publicly held businesses and different government agencies.
Sectors such as health, defense and education will be the main beneficiaries in the 2012 budget as the allocation for these ministries has been increased. Spending in the education sector will go up by 33 percent and for the healthcare sector it is going to be 15 percent. As per the proposed budget the foreign ministry and the ministry of industry and trade will see the biggest cuts.
11 percent of the aggregate allocation of the 2012 Brazil budget will be used for discretionary expenses. The remaining money will be used for paying the pensions, debt servicing and salaries.
As per the proposed budget, Brazil has reduced its savings target for 2012 fiscal. The government is trying to increase its pension payments to 200 percent of the present rate of inflation.
There will be a 13.6 percent increase in pension payments, infrastructural expenses and tax benefits for the industrial sector.
The allocation for the latter two sectors is being done with an eye on the 2014 World Cup.
The government is supposed to spend 1.8 billion reals for construction of stadiums and refurbishing airports that will be used during the 2014 soccer World Cup and the Summer Olympics that is to be staged at Rio de Janeiro in 2016.
The minimum monthly wage in Brazil will be raised to 619.21 reals in 2012 from 545 reals in 2011. This will include the 13.6 percent increase that will be applicable to pensions.
Brazil has been able to achieve its budgetary targets for 2011 fiscal because of the high levels of tax revenue. However, this might not be the case in 2012 due to lesser economic growth.
It is expected that in 2012 the inflation rate will be limited to 4.8 percent while the government aims to keep it to 4.5 percent.
Expectations from Brazil Budget 2012
Of late the Brazilian government has been discussing various ways of introducing a certain level of financial discipline but analysts feel that the proposed budget is contradictory to such messages.
A finance professor with the University of Brasilia, Roberto Piscitelli, has opined that the government is being contradictory with its budgetary statements and economic decisions. According to Piscitelli, the economic policymakers have not been able to raise the salaries of civil servants due to insufficient funds but are still announcing expenses in other domains.
Miriam Belchior has stated that presently Brazil government is looking to provide some economic leeway with the supposedly inflated budget it is being assumed that the additional amount will be useful in dealing with emergencies and other requirements.
Some economic analysts are of the opinion that the administration headed by President Dilma Rousseff did not wish to irk the legislators with stricter economic measures.
Of late, Rousseff s allies have been directly boycotting her legislative movements as they have been upset by the anti-graft drive and reduced spending measures undertaken by the present administration.
Analysts feel that financial issues around the world could take their toll on Brazil s economic growth. They are of the opinion that the growth rate for 2012 fiscal could be lesser than that in 2011 fiscal.
The gross domestic product is predicted to grow by a rate of 3.8 percent for 2011 fiscal, which is significantly lower than the 7.5 percent in 2010. This shows that Brazil as a country has not been able to sustain its economic growth.
In July 2011 the central government generated tax revenue worth 90.2 billion reals, which is higher than the 69.6 billion reals generated in July 2010. Recently, Brazil s economy has been facing some issues with a decrease in China s demand for Brazilian commodities.
Industrial production has dipped by 0.27 percent in July 2011 compared to July 2010. The economic activity index of the Central Bank of Brazil dipped in June this year this is the first time this has happened since December 2008. The present levels of business confidence are at their lowest since December 2009.