BRAZIL FISCAL PLAN - The key points
Reuters, Wednesday, October 28, 1998 at 12:26
RIO DE JANEIRO, Oct 28 (Reuters) - The following are key
points of Brazil's three-year fiscal austerity plan, which was
unveiled Wednesday and is expected to save and raise a total of
some 100 billion reais ($84 billion) by 2001.
BUDGET CUTS
* In 1999, federal government plans 8.67 billion reais in
spending cuts.
* In 2000, 8.84 billion reais in federal cuts.
* In 2001, 9.02 billion reais in federal cuts.
TAX INCREASES
* Financial transactions tax (CPMF) raised from 0.2 percent
to 0.38 percent in 1999 and to 0.3 percent in 2000 and 2001.
* Pension contribution paid by companies (Cofins) raised to
3 percent of revenue from 2 percent; banks and financial
institutions now required to pay Cofins as well.
* Tax increases expected to raise 13.3 billion reais in
1999, 11.4 billion in 2000 and 11.96 billion in 2001.
IMMEDIATE SOCIAL SECURITY DEFICIT REDUCTION
* Retired civil servants required to pay minimum 11 percent
pension contribution currently levied on working civil
servants.
* Civil servants earning over 1,200 reais per month will be
charged an additional 9 percent of their salary for five
years.
* Measures expected to reduce social security deficit by
2.55 billion reais in 1999, 4.3 billion reais in 2000 and 4.43
billion reais in 2001.
STRUCTURAL REFORMS
* Profound reforms of pension and tax system needing
Congressional approval and expected to save 3.53 billion reais
in 1999, 9.21 billion in 2000 and 12.58 billion in 2001.
FORECASTS
* Brazil with this fiscal austerity plan expects to save
and raise 28 billion reais in 1999, 33.7 billion in 2000 and 38
billion in 2001.
* The public sector should show primary surpluses of 2.6
percent of GDP in 1999, 2.8 percent in 2000 and 3 percent in
2001. These figures exclude debt servicing.
* The plan forecasts the economy should grow 0.5 percent in
1998. It also expects Brazil's economy will shrink 1.0 percent
in 1999, and then start to grow again with a 3.0 percent
expansion in 2000 and a 4.0 percent increase in 2001.
* The government expects the social security deficit for
civil servants to reach 34 billion reais in 1998.
* The government expects the key overnight interest rate,
known as the SELIC, to fall from the current 42.4 percent to
around 22 percent by mid-1999, to 17 percent by mid-2000 and to
below 15 percent by mid-2001.
$ = 1.19 real
x 2120, tracey.ober@reuters.com))
Copyright 1998, Reuters News Service |
