BRASILIA, Jan 28 (Reuters) - Brazilian Finance Minister Guido Mantega on Friday said the International Monetary Fund was wrong to worry about the country's fiscal position, saying the public accounts were improving.
The IMF on Thursday said Brazil's fiscal deterioration was 'particularly pronounced.'
Brazil's government is promising big budget cuts as it tries to pave the way for eventually lower interest rates.
Possible cuts will be announced between Feb. 10 and 12, Planning Minister Miriam Belchior said.
The IMF 'forecast for 2011 is totally wrong,' Mantega told reporters in Brasilia, referring to the Fund's report on fiscal balances around the world, which noted concerns about Brazil.
He said the Fund was predicting Brazil would end 2011 with an overall budget deficit of 3.1 percent of gross domestic product, far above his ministry's forecast of around 1.8 percent.
Mantega also addressed a call from the central bank which on Thursday highlighted the need for fiscal restraint in minutes from its latest monetary policy meeting. .
'The central bank is in tune with the policies which we are putting forward, which is to reduce expenditure, so that it can conduct a less rigorous monetary policy. We are complementing each other in this matter,' he added.
Expected further increases in Brazilian interest rates could crimp growth in Brazil and attract more speculative capital inflows into an economy already struggling with an overvalued local currency.
Brazil's benchmark interest rate of 11.25 percent is among the world's highest.
The government plans a 'strong' budget freeze, Treasury Secretary Arno Augustin said after releasing data showing the primary surplus of the central government -- which excludes debt payments -- doubled in 2010 from 2009.
The central government, which includes the Treasury, the central bank and Brazil's social security system, posted a primary surplus of 78.97 billion reais ($46.9 billion) compared to a surplus of 39.44 billion reais in 2009, data showed.
That was partly thanks to a capitalization of oil giant Petrobras, which sold $70 billion in shares on Sept. 24. See .
'Petrobras contributed but the main reason was the recovery of the Brazilian economy,' Augustin added.
Brazil's economy is expected to have grown more than 7 percent in 2010.
Investor attention now turns to the government's consolidated primary budget numbers on Monday, which also include the accounts of Brazilian states and cities.
Brazil's consolidated primary budget surplus is expected to reach 13.8 billion reais, according to Banco Votorantim, up from 4.2 billion reais in November.
Analysts will look to see whether the government manages to reach its target for a primary surplus of 3.1 percent of gross domestic product in 2010.
The primary surplus was way off that in the 12 months through November, with a surplus of only 2.51 percent of GDP.
($1=1.683 reais)
(Reporting by Leonardo Goy, Hugo Bachega and Ana Nicolaci da Costa; Writing by Ana Nicolaci da Costa; Editing by Leslie Adler) Keywords: BRAZIL ECONOMY/MANTEGA (ana.nicolacidacosta@thomsonreuters.com; Reuters Messaging: ana.nicolacidacosta.thomsonreuters.com@reuters.net; +55-61-3426-7027) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The IMF on Thursday said Brazil's fiscal deterioration was 'particularly pronounced.'
Brazil's government is promising big budget cuts as it tries to pave the way for eventually lower interest rates.
Possible cuts will be announced between Feb. 10 and 12, Planning Minister Miriam Belchior said.
The IMF 'forecast for 2011 is totally wrong,' Mantega told reporters in Brasilia, referring to the Fund's report on fiscal balances around the world, which noted concerns about Brazil.
He said the Fund was predicting Brazil would end 2011 with an overall budget deficit of 3.1 percent of gross domestic product, far above his ministry's forecast of around 1.8 percent.
Mantega also addressed a call from the central bank which on Thursday highlighted the need for fiscal restraint in minutes from its latest monetary policy meeting. .
'The central bank is in tune with the policies which we are putting forward, which is to reduce expenditure, so that it can conduct a less rigorous monetary policy. We are complementing each other in this matter,' he added.
Expected further increases in Brazilian interest rates could crimp growth in Brazil and attract more speculative capital inflows into an economy already struggling with an overvalued local currency.
Brazil's benchmark interest rate of 11.25 percent is among the world's highest.
The government plans a 'strong' budget freeze, Treasury Secretary Arno Augustin said after releasing data showing the primary surplus of the central government -- which excludes debt payments -- doubled in 2010 from 2009.
The central government, which includes the Treasury, the central bank and Brazil's social security system, posted a primary surplus of 78.97 billion reais ($46.9 billion) compared to a surplus of 39.44 billion reais in 2009, data showed.
That was partly thanks to a capitalization of oil giant Petrobras, which sold $70 billion in shares on Sept. 24. See .
'Petrobras contributed but the main reason was the recovery of the Brazilian economy,' Augustin added.
Brazil's economy is expected to have grown more than 7 percent in 2010.
Investor attention now turns to the government's consolidated primary budget numbers on Monday, which also include the accounts of Brazilian states and cities.
Brazil's consolidated primary budget surplus is expected to reach 13.8 billion reais, according to Banco Votorantim, up from 4.2 billion reais in November.
Analysts will look to see whether the government manages to reach its target for a primary surplus of 3.1 percent of gross domestic product in 2010.
The primary surplus was way off that in the 12 months through November, with a surplus of only 2.51 percent of GDP.
($1=1.683 reais)
(Reporting by Leonardo Goy, Hugo Bachega and Ana Nicolaci da Costa; Writing by Ana Nicolaci da Costa; Editing by Leslie Adler) Keywords: BRAZIL ECONOMY/MANTEGA (ana.nicolacidacosta@thomsonreuters.com; Reuters Messaging: ana.nicolacidacosta.thomsonreuters.com@reuters.net; +55-61-3426-7027) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.