MercoPress. South Atlantic News Agency

Brazil planning additional cuts of 32bn dollars in 2012 budget

Congress is demanding more funds from Dilma Rousseff for this year’s municipal elections

Brazil's government may cut as much as much 60 billion Reais (32 billion dollars) from spending in 2012 in an effort to control its deficit and inflation, the Estado de Sao Paulo newspaper reported, citing unnamed Finance Ministry officials.

Brazilian President Dilma Rousseff who on Sunday marked one year in office had planned to ease financial controls in 2012 after trimming about 50 billion Reais in spending in 2011, the newspaper said.

The new cuts are needed to allow Rousseff to meet a goal of holding the government's deficit before interest payments on debt to 3.1% of GDP while still finding new money for social and infrastructure spending, Estado de Sao Paulo said.

This goal has been made more difficult by a sluggish U.S. economy and the European debt crisis.

The spending cuts could increase tension with Congress, which is seeking 32 billion Reais of additional spending ahead of municipal elections in October, the paper said.

The proposed cuts represent almost 10% of the 618.7 billion Reais of current program spending in the 2012 budget, according to the Planning Ministry's website. Current spending represents less than a third of Brazil's total budget.

Brazil plans to spend 2.23 trillion Reais (1.2 trillion dollars) in 2012, which is 8.6% more than in 2011, according to the Planning Ministry. Of that, 41% will go to pay local and foreign debt and 26%to social security.