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Brazil announces budget cut in government program

Xinhua, February 20, 2016 Adjust font size:

The Brazilian government announced on Friday a 4.2 billion real (1.04 billion U.S. dollars) budget cut in the government's infrastructure program.

With the cuts, the Growth Acceleration Program (PAC) budget fell from 30.7 billion reals (7.6 billion dollars) to 26.5 billion reals (6.6 billion U.S. dollars).

According to the Planning and Budget Minister Valder Simao, the government will prioritize ongoing projects to ensure that they are not interrupted.

The government also announced a review in GDP growth estimates for this year, saying the economy will undergo a contraction of 2.9 percent in 2016. The figure represented a significant change from the previous projection of a 1.9 percent contraction.

The government estimated an inflation rate of 7.1 percent this year, while the financial market estimated a 7.7 percent rate.

Either way, the projection is higher than the inflation target set for 2016, which is 4.5 percent with a two point tolerance, which means the rate should not exceed 6.5 percent. Last year, the inflation rate also exceeded the target, reaching 10.6 percent. Endi