Brazil sees saving 1.17 pct GDP with admin reforms
Reuters, Thursday, September 24, 1998 at 15:43
BRASILIA, Sept 24 (Reuters) - The Brazilian government aims
to save the equivalent of 1.17 percent of the gross domestic
product annually with the passage of administrative reforms, a
senior Finance Ministry official said Thursday.
Separately, the government hopes to save 2.6 billion reais
in the first 12 months after pension reforms are approved, the
ministry's executive secretary Pedro Parente said during a
speech to businessmen.
"Our estimate is that pension reform could produce savings
of 2.6 billion reais in the first 12 months, 3.44 billion reais
in the second year, 4.31 billion reais in the third year,
totaling 62 billion reais over 10 years," Parente said.
Civil service reform has been approved by Congress but is
awaiting final regulation before it can be implemented.
Lawmakers must vote on another three amendments to the pension
reform bill before it can be approved.
Government officials said recently they would send a new
proposal for tax reform to Congress before the end of the year.
Parente said one of the measures being studied as part of
the new bill was creating a national value-added tax to be
administered by the states.
"We are working on this...it is the only change I can
mention. States would levy the tax as long as the legislation,
the regulation, is federal," he said.
The tax reform bill previously submitted to Congress
proposed scrapping several existing taxes, including the Tax on
the Circulation of Goods and Services, and substituting a
value-added tax to be levied by the federal government.
"The Finance Ministry is not committed to its (previous)
proposal," Parente said. "The commitment we have is to the
problems which we have to solve."
The executive secretary said it was essential for Brazil to
slash its huge budget deficit, currently more than 7 percent of
gross domestic product, to maintain growth.
The government has announced more than $5 billion in new
spending cuts this month to convince foreign investors it is
serious about attacking the deficit, the Achilles heel of its
economy, as a global crisis batters emerging markets.
Parente said foreign direct investment in Brazil had not
been affected despite the market turmoil.
"There has been no reduction in foreign direct investment
in the last few months, weeks or days," he said, without giving
further details.
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Copyright 1998, Reuters News Service
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