Brazil’s Mantega worried about a rise in spending

* Budget committee sees extra $12 billion income in 2011

* Mantega worried it could spur more spending

BRASILIA, Nov 4 (BestGrowthStock) – Brazilian Finance Minister
Guido Mantega said on Thursday he was worried that the
congressional budget committee’s move to raise its revenues
forecast for next year could lead to more government spending.

The comments come as investors are looking for reassurances
that the next government will rein in spending after Brazil’s
fiscal accounts deteriorated in an election year. Dilma
Rousseff reiterated her commitment to prudent fiscal spending
in her first remarks as president-elect on Sunday.

“There is no reason to increase revenues for next year,
because raising revenues means increasing spending,” Mantega
told reporters. “It is almost 20 billion reais ($11.93 billion)
extra and we don’t have conditions to raise spending. Now we
need to make an effort to reduce spending.”

The lower house news agency reported the congressional
budget committee was expecting an additional 17.7 billion reais
of government revenue next year. The 2011 budget projected the
government would collect 967.6 billion reais in revenue next
year, excluding income from financial sources.

Brazil’s fiscal accounts have struggled in 2010 as a surge
in government spending helped offset a rise in tax revenue from
a booming economy. Even including revenue linked to a state-run
Petrobras’ (PETR4.SA: ) stock offering, the country’s primary
budget surplus fell short of a year-end target.

In the 12 months to September, the surplus was 2.96 percent
of gross domestic product, below a government target of 3.3
percent of GDP.

The increase in expected revenue had no foundation because
it was based, among other things, on the expectation of more
income resulting from a rise in the so-called IOF tax, Mantega
said. Brazil’s government in October tripled a tax on capital
inflows to local bonds to 6 percent in a bid to contain a rally
in the local currency.

“The IOF is a tax that can be transitory,” Mantega said,
adding that it was regulatory in nature.

“At times you use it, at times you take it away. It
therefore cannot be considered a permanent (source of) tax
collection.

($1=1.676 reais)
(Reporting by Ana Nicolaci da Costa; Editing by Dan Grebler)

Brazil’s Mantega worried about a rise in spending