Brazil's Mantega: Will Use BRL20 Billion Tax Cuts To Meet 2013 Surplus Target

BRASILIA--Brazil's government will allow itself to apply 20 billion Brazilian reais ($10.15 billion) of its foreseen tax reductions this year to meet its public sector budget surplus target, Finance Minister Guido Mantega said Wednesday.

Speaking outside the finance ministry ahead of a meeting with President Dilma Rousseff, Mr. Mantega said the government would raise the amount of the surplus accounting allowance beyond $10 billion confirmed by Planning Minister Miriam Belchior earlier in the day.

Brazil's government has pledged to post a public sector primary, or operating, budget surplus of BRL155.9 billion, or the equivalent of approximately 3.1% of gross domestic product, this year. With the accounting allowance, however, it would only be required to set aside BRL135.9 billion of that amount.

The government last year pledged to meet a surplus target of BRL139.8 billion, but was forced to use accounting allowances against public investments and tap the country's sovereign wealth fund to meet the target.

The difficulty in meeting the target in 2012 came after the government extended some BRL45 billion in tax breaks to industries and consumers as part of an economic stimulus program. Government officials have said they plan to offer at least BRL45 billion in tax breaks this year to help boost economic growth beyond an unexpectedly low 0.9% posted in 2012.

The public sector surplus is used to pay down the country's debt, which currently stands at around 35% of GDP.

Bruno Lourenco in Brasilia contributed to this article.

Write to Gerald Jeffris at gerald.jeffris@dowjones.com

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