Brazilian Finance Minister Joaquim Levy said on Monday that the size of the budget freeze announced last week was "adequate," but he expressed concern about the forecast for government revenues this year.
In his first public remarks after the announcement of a 69.9 billion reais freeze in government spending this year, Levy sounded a cautious note about prospects for the Brazilian economy and government revenues.
Levy did not participate in the Friday press conference where Planning Minister Nelson Barbosa announced the budget freeze, fueling speculation that Levy was not happy with the size of the cuts and with the forecast for government revenue.
"We have a revenue problem," Levy told reporters in Brasilia on Monday. "Over the past few years, revenues have been systematically insufficient to meet government needs," he said, noting that the government has been resorting to extraordinary sources of revenue to meet its fiscal targets.
"We're seeing this year that revenues haven't been very meaningful either."
Asked about his expectation for economic growth in the first quarter, Levy said a contraction "wouldn't be a surprise."
He also cautioned that fourth-quarter gross domestic product, which came in at a modest growth rate of 0.3 percent compared with the previous quarter, could be revised lower.
The government has been launching a number of austerity measures after years of overspending in a bid to restore the credibility of its fiscal policy and to safeguard the country's investment grade credit rating.
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