The government forecasts inflation of 4,8% and GDP growth of 5% in 2012.

The 2012 budget bill, submitted today to the National Congress, projects an accumulated inflation rate of 4,8% for next year, higher than the central inflation target of 4,5%, according to the Ministry of Planning. This means that the bill does not endorse the convergence of the IPCA (Broad Consumer Price Index) to the target in 2012, as assured by the Central Bank.

The projected GDP growth for 2012 is 5%, the same percentage foreseen in the Budget Guidelines Law (LDO) approved by the National Congress. Maintaining this GDP growth signal indicates that the government is not anticipating a further slowdown in the pace of economic activity.

The draft budget law also forecasts an accumulated IGP-DI (General Price Index - Domestic Supply) of 5% in 2012. The average exchange rate projected for the preparation of the budget was R$ 1,64 per dollar, and the estimated Selic interest rate for December of next year is 12,50%. The draft also foresees a nominal increase in the wage bill in 2012 of 9.8%. The economic parameters foreseen in the draft budget law are prepared by the Economic Policy Secretariat of the Ministry of Finance.

Primary surplus

The Ministry of Planning reported that the primary surplus target for 2012 was set at a nominal value of R$ 114,2 billion, which corresponds to 2,5% of GDP. The data shows that the government will reduce part of the PAC (Growth Acceleration Program) investments to achieve this target. R$ 25,6 billion will be cut, equivalent to 0,6% of GDP.

The central government's contribution (National Treasury, Social Security, and Central Bank) to the economy in 2012 will be R$ 97 billion (2,1% of GDP). After deducting some of the resources from the PAC (Growth Acceleration Program), the central government's actual effort will be R$ 71,4 billion, equivalent to 1,6% of GDP. Regional governments will have to achieve a primary surplus of R$ 42,8 billion, which corresponds to 0,9% of GDP.

Investments

Investments projected in the 2012 budget bill total R$ 165,3 billion, according to data released today by the Ministry of Planning. Of this total, R$ 106,8 billion are investments planned by state-owned companies. The remaining R$ 58,5 billion are from the fiscal and social security budget. The total investment is 8,3% higher than what was available in 2011. A large part of the investments refers to the Growth Acceleration Program (PAC), which will receive R$ 111,3 billion, with R$ 42,5 billion from the fiscal budget and R$ 68,7 billion from state-owned companies.