Brazil budget sees economy growing 5 pct in 2008

Aug 31, 2007 - The Brazilian government's budget proposal for 2008 forecasts the economy will expand 5 percent next year, in line with previous estimates and slightly above official expectations of about 4.5 percent growth in 2007, the Planning Ministry said on Friday.

The proposal also estimates that Brazil's benchmark IPCA consumer price index will rise 4 percent in 2008, in line with market forecasts and below the central bank's annual target of 4.5 percent inflation.

The IPCA, which the central bank uses as a guide when setting interest rates, is widely expected to rise less than 4.5 percent in 2007 as well.

The budget proposal, which will be sent to Congress for approval, estimates that the government will set aside 30.2 billion reais ($15.4 billion) next year for investments. Some 18.8 billion reais of that will go to the government's so-called growth acceleration package, a series of measures aimed at jump-starting Brazil's sluggish economy.

The budget also earmarks 62.1 billion reais for investments in 2008 in state-run enterprises such as oil giant Petrobras.

The proposal estimates the social security deficit will fall to 41.6 billion reais at the end of 2008 from a projected 45 billion reais in 2007. The social security system has long been a major drag on Brazil's public finances.

The budget also estimates that the monthly minimum wage will climb to 407.33 reais in 2008 from 380 reais at present. ($1 = 1.96 reais)