Brazil announced budget cuts expected to total $8.4 billion a year as it reins in government spending at the start of another year with the economy in the doldrums. President Dilma Rousseff, narrowly reelected in October, signed a decree limiting discretionary spending on travel, services and purchasing. Brazil's planning ministry said the cuts would save 1.9 billion reais ($703 million) a month, or about $8.4 billion a year.
The Brazilian Congress, currently in recess, has yet to approve the 2015 budget. "The government is sending a clear sign on budget cuts as a difficult year awaits and it is starting off by cutting spending to reduce risk," Jose de Lima Goncalves, chief economist with Fator Bank in Sao Paulo, told AFP. "Under the new Rousseff government there will be a budgetary policy of restraint rather than the expansion of previous years," added Goncalves.
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