January 6, 2015 / 9:07 PM / 5 years ago

Brazil to slow down investments to signal fiscal restraint: source

Brazil's President Dilma Rousseff waves to the crowd after being sworn in for a second four-year term in Brasilia January 1, 2015. REUTERS/Sergio Moraes

BRASILIA (Reuters) - The Brazilian government plans to slow down investments at the start of the year and create a new fiscal council, a government official told Reuters on Tuesday, in another sign of fiscal restraint to regain investors’ confidence.

President Dilma Rousseff has vowed fiscal discipline in a second four-year term that started on New Year’s Day after years of high spending depleted the public accounts, raising fears about the fiscal health of Latin America’s top economy.

The government could announce as early as Tuesday that it will reduce the funds it plans to use for non-obligatory expenditures, which includes public investment in infrastructure and technology, until the 2015 budget bill is approved by Congress in February or March.

The 2015 budget guidelines allow the government to use up to 1/12 of expected expenditures while the bill is not approved to keep paying salaries and making investments.

For non-obligatory expenditures the government will now reduce the available amount to 1/18, said the official. He said the decision is to signal the government’s commitment to its fiscal goals this year.

The official, who asked not to be named to speak freely, did not say how much the government will save up with that move. In 2013, the government spent about 250 billion reais ($92 billion)in non-obligatory items.

A finance ministry spokesperson was not immediately available for comments.

The government will also launch a council to evaluate public spending, the official said. The new fiscal council will be made up of representatives of the finance and planning ministries, the president’s chief of staff office and the comptroller general known as CGU.

Reporting by Jeferson Ribeiro; Writing by Alonso Soto; Editing by Chizu Nomiyama

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