Minister supports use of Sovereign Fund for covering expenses

Brazil's Finance Minister Guido Mantega regards as legitimate the use of the Sovereign Fund of Brazil for covering expenses incurred by the Union in 2014. The frustrated predictions about an increase in tax collection led the government to withdraw $1.46 billion from the fund in an attempt to prevent new cuts in non-mandatory expenses.

“The Sovereign Fund is a primary savings account that we created in 2008. There's nothing more legitimate than using [this money] we've been saving to cover part of the expenses,” said the minister on Tuesday (Sep 23). The decision to resort to the fund can be found in the Assessment Report on Revenues and Expenses, which is published every two months by the Ministry of Planning and provides the guidelines for the execution of the General Budget of the Union.

The report further reveals that the economic staff has reduced the official estimate for the growth in the country's gross domestic product—from 1.8% to 0.9%. As regards inflation, the prediction was kept at 6.2%. The study also foresees that, in spite of the high value of the dollar, the average exchange rate will close out 2014 at R$ 2.29.

The Sovereign Fund was formed with the excess from the primary surplus—the resources saved in order to pay the interest of the public debt—in 2008. These savings served as a reserve in case the government needed to close its public accounts. At the end of 2012, the National Treasury had withdrawn $5 billion to reach the goal of the primary surplus for that year.

Translated by Fabrício Ferreira

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