The country's economy is expected to grow 5.0 percent in 2012, compared to a 4.5 percent growth forecast for this year, according to an outline of the 2012 budget released on Friday.
Inflation in 2012 was estimated at 4.5 percent, compared with an annual rate of 5 percent seen for 2011.
Brazil's fiscal position deteriorated rapidly in the last year of President Luiz Inacio Lula da Silva's administration but the government now hopes around $30 billion worth of budget cuts in 2011 will bring the country's accounts back in order.
Investors look at the primary budget surplus, excess of revenue over expenses excluding interest payments, as a gauge of a country's ability to service its debt.
Latin America's largest economy grew 7.5 percent in 2010, far outpacing developed economies and pushing price pressures to the top of the government's target range.
Policymakers aim to keep inflation this year at 4.5 percent, plus or minus 2 percentage points.
Monetary tightening, a series of regulatory measures to curb credit growth and sizable cuts to the 2011 budget are expected to bring inflation back down next year.
That would open the way for the benchmark Selic rate to fall to 10.75 percent, according to the outline, from 11.75 percent currently.
The government also sees Brazil's real at an average of 1.76 per dollar, from around 1.57 per dollar currently. Authorities have been aggressively intervening in the foreign exchange market in recent months to arrest a rally in the local currency that has been hurting local industry.