Brazil’s Annual Budget Planning Season

By Ben Tavener, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – As Brazilian President Dilma Rousseff summoned her government to the annual ministerial meeting on Monday to take stock of the past year, and set out plans and goals for 2012, she must have been only too conscious of the balancing act her government will have to perform this year with keep the economy booming, the populace spending and public services improving.

Although fiscal tightening is expected this year, ministers were quick to play down rumors of swingeing cuts, and the president reminded reporters that budget cuts would not form part of the meeting’s agenda.

After spending four days in “intense meetings” with ministers from all governmental departments, President Rousseff asked ministers to come up with a list of departmental priorities.

They were also asked to look at where cuts could theoretically be made, as the president needs to press on with her planned spending cuts, without compromising the country’s economic growth.

Speaking at the ministerial meeting, Finance Minister Guido Mantega said that average growth for the year would be “above four percent”, bolstered by growth in the jobs market, strong local development and foreign investment.

“[Brazil] will be one of the few countries in the world to grow more this year than the last, despite unfavorable international conditions,” he said.

Some are betting on as much as 4.5 percent growth in the country’s GDP in 2012 which, although better than the 2.9 percent estimated growth that 2011 provided, is a far cry from 2010 when the economy surged over seven percent.

The largest budget cuts – some expecting to be between R$32 billion and R$60 billion – will be left until later in 2012, to prevent stifling the economy in the first two quarters, and ministers have dismissed rumors that cuts could total R$70 billion.

Budget cuts form part of the general budget report, which should be presented at the end of January to explain how Brazil’s 2012 federal budget – estimated to total R$2.257 trillion (US$1.29 trillion), around R$187 billion more than in 2011 – will be allocated.

The government also recently announced that it expects to include another 320,000 families on the Brasil sem Miséria (Brazil without Misery) program in 2012, adding to the 400,000 families were registered on the government’s flagship social program in the past six months.

Aside from the country’s budget, one of the biggest changes announced at the meeting was that all government programs must, within six months, be able to be monitored online, preferably in real time.

Hailed a “revolutionary, progressive and indispensable design” of state reform by the government, some commentators are saying the step is likely, at least in part, to have been made in light of the string of ministerial scandals that blighted Dilma’s first year in office.

The president called the changes part of the movement which, she hopes, will bring millions of Brazilians into the middle class, and at the same time force public services to operate more transparently.

Despite the recurring corruption scandals leading to the resignation of seven ministers in 2011, a recent poll by Datafolha shows President Rousseff is more popular than Lula was in either of his first terms, or indeed in comparison with any other president’s first term since the country’s democratization.

Fifty-nine percent of those surveyed said Dilma was doing an “excellent” or “good” job, up ten points on six months ago, according to Folha de São Paulo newspaper.