Rio, March 25, 2004 (Agência Brasil) - Sustainable growth of the Brazilian economy began in the second half of last year, when industry experienced an increase of 5%, which represented one of the sector's highest rates of growth. "And this growth has continuity in 2004," assured the Minister of Planning, Guido Mantega, yesterday (24), on the basis, he said, of the increases detected in retail sales and formal employment and the continued growth in industrial production.
According to the bimonthly report of federal government revenues and expenditures, sent to the Congress by the Ministry of Planning, as determined by the Law of Fiscal Responsibility, federal government tax collections rose US$ 375 million (R$ 1.1 billion), lifting the forecasted annual receipts of the government from US$ 138.5 billion (R$ 406 billion) to US$ 138.9 billion (R$ 407.1 billion).
As the Minister explained, "this means that we shall have a little bit more money for the government to pay for its investments and its expenses."
He attributed most of the revenue increase to the Income Tax and the Contribution to Fund Social Security (Cofins), a reflection of the increase in the level of activity in the last quarter of 2003 and company profits. He pointed out, however, that the fact that the government has more resources for investments and expenses, with a multiplier effect on the economy, does not mean that it is "swimming in money." Only that a little more money is available to be able to take care of the country's needs.
In the case of the Cofins, which is based on company earnings, the Minister explained that there was an increase in the efficiency of this tax, because the cascading effect was eliminated, and collection began to be made at a single point in the productive chain, permitting better control and reducing the level of tax evasion. "There was no general increase in the tax burden, although some sectors are going to pay a little more. Those that have a longer productive chain will pay less," he disclosed.
Mantega believes that revenues should remain on a favorable plane but did not venture to make predictions. As a consequence of the increase in receipts, the federal government will liberate US$ 273 million (R$ 800 million) that were being kept on a contingency basis.
The Minister informed that the exact definition of where these resources will be allocated will occur next week. He revealed, however, that an important share will be destined to investments in areas such as transportation and agrarian reform, and another part will be used to pay personnel, as a result of agreements that are being reached with workers on strike and which will give rise to additional expenses.
Mantega admitted that, if the positive collections continue, the government can raise its forecast for federal investments this year. The current forecast is for 0.5% of the GDP (Gross Domestic Product), which represents US$ 4 billion (R$ 12 billion).
The Minister of Planning affirmed that "every additional amount that the government manages to obtain will be directed towards investments, except the mandatory expenses that cannot be omitted. In 2004 the government made a big effort to put more money in investments, because they have a multiplier effect. As well as generating infrastructure, which is necessary for growth, they create more jobs and orders for other sectors. So, they should be maximized."
The initial projection of US$ 4 billion includes US$ 990 million (R$ 2.9 billion) for sanitation. The goal, however, is to reach US$ 5.1 billion (R$ 15 billion) in investments this year, if the budget approved by the Congress is concretized.
The US$ 4 billion that are allocated represent, if effectuated, double the amount that was spent last year, which was US$ 2.1 billion (R$ 6.2 billion).
Translator: David Silberstein
