Brazil’s government expected to expand spending block on ministries, says finance minister

BRASILIA, May 21 (Reuters) – Brazil’s government is expected to announce on Friday an increase of spending blocks across ministries to stay within this year’s spending cap, Finance Minister Dario Durigan said on Thursday.

The block currently stands at 1.6 billion reais ($320 million). The government has scheduled the presentation of its bimonthly revenue and expenditure report for 3 p.m. local time (1800 GMT) on Friday.

Durigan said in an interview with CNN Brasil that despite expanding the restrictions on spending, it will not be necessary to trigger a spending freeze — a measure activated when the economic team sees a risk of missing the year’s fiscal target.

“We are moving toward an increase in the block, so the government is cutting into its own flesh,” the minister said.

He argued that federal revenues have come in line with estimates, but that the government should continue on a gradual path toward fiscal consolidation, which includes taking steps to curb rising expenses.

The government targets a primary surplus of 0.25% of GDP for this year, with a tolerance band of 0.25% in either direction. In March, it estimated a primary surplus of 3.5 billion reais, or roughly 0% of GDP, for this year.

($1 = 5.0055 reais)

(Reporting by Bernardo Caram; Writing by Fernando Cardoso; Editing by Chris Reese and Lincoln Feast.)