The Brazilian government unveiled $22.6-billion budget cuts in an attempt to thwart an investment downgrade and to rebalance the country’s economy, local media reported Friday.
Discretionary expenses have been cut from 4.7 percent of GDP to 4.2 percent.
The changes to the budget are needed to meet the country’s fiscal austerity goals and balance the budget.
Some infrastructure projects’ budgets will be cut, as well as the financing of the “My House, My Life” project focusing on building housing for poor Brazilians.
In what could bring some relief to Brazilian infrastructure plans, the Industrial and Commercial Bank of China Ltd (ICBC), the world’s largest bank by assets, is setting up a $50 billion fund with Caixa Econômica Federal, Brazil’s largest mortgage lender, to invest in Brazilian infrastructure projects. This was announced during the Chinese Premier’s visit to Brazil.
Brazil is currently facing an economic downturn, with an overall budget gap estimated at 6.7 per cent of GDP — one of the highest among the developing countries.