Brazil fiscal package done but defense ministry OK pending, Haddad says

SAO PAULO (Reuters) – The Brazilian government’s package of spending cuts is practically done and will be released soon, pending only a response from the defense ministry, Finance Minister Fernando Haddad said in an interview with Times Brasil/CNBC on Sunday.

“The package is agreed with the president (Luiz Inácio Lula da Silva). We’re going to announce it soon, because we’re missing a response from one ministry … the Ministry of Defense,” said Haddad.

“We had good meetings with the minister (José Múcio) and the commanders of the forces.”

Haddad did not comment on the total amount of spending that the new fiscal measures will reduce, stating only that “the package is the size of our needs to maintain balanced growth.”

Haddad also said he believed that a fiscal adjustment could eventually lead to interest rate cuts by helping to slow inflation, after market expectations recently led the central bank to accelerate its monetary tightening pace.

The government has been promising to announce measures to contain spending in order to guarantee the sustainability of its fiscal framework, having previously said that the package would be announced after the second round of municipal elections in late October.

The delay in the announcement has caused stress in the markets, putting pressure on Brazilian assets.