Brazil’s Stocks, Real Lead World Gains on Spending-Cut Proposal


Brazilian stocks and the real led world gains amid optimism government spending cuts will help shore up the budget and avoid another sovereign credit-rating downgrade.
Traders pushed the Ibovespa and the real higher after Finance Minister Joaquim Levy said the government plans to reduce 26 billion reais ($6.8 billion) in expenditures from next year’s budget in large part by capping salaries of civil servants and suspending exams for new entrants.real
Finding ways to bolster the budget without waiting for lawmakers’ approval would mark a new strategy for president Dilma Rousseff’s administration, which has been struggling to win support for measures that would curb debt, tackle inflation and avoid more downgrades. S&P assigned a negative outlook to its rating when it cut the country to junk last week, meaning more cuts could be on the way. The ratings company said the political stalemate and repeated reductions in the government’s budget target have undermined the country’s creditworthiness.
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