Brazil to rein in spending

Reuters of Brazil's Finance Minister Guido Mantega, Miriam Belchior, who will take over as planning Minister and Alexandre Tombini.

The new economic policy team announced Wednesday by Brazilian President Dilma Rousseff a mandate for continuity strengthened 31 given to her by the electorate Oct. and committed to rein in spending as risks posed by the global downturn appear to fade for biggest economy in Latin America.

All three policy makers that are already announced by Mrs Rousseff under the current management of Brazilian President Luiz Inácio Lula da Silva, who his mandate at 31.12.ends.Mrs Rousseff is hand-picked successor President Lula and you handily won presidential popularity in the second round voting.

The Finanzministerium--a post related to Brazilian Premierminister--head reappointed Rousseff of established Guido Mantega, a sign that prudent fiscal policy is a priority with probably cuts in government spending bleibt.Bei of another important economic post supported Mrs Rousseff chief supervision officer Alexandre Tombini to the post of the President of the Central Bank.

When planning called responsible for the Federal Minister Mrs Rousseff Miriam Belchior, currently responsible for the Federal Government broad and popular public works program, known as the PAC

In a statement Wednesday promised wife Rousseff, retained their management of the pillars of successful policies in place.

"The President-elect has determined that the new team is continuity of Government Lula versichern-successful economic policy - based fluctuating exchange rate and financial targets on a regime of inflation accountability - and progress to the Brazil defeat poverty and allow the level of a fully developed nation," the statement said.

Back to the management of Fernando Henrique Cardoso, who was the three main policy date from 1995 to 2002 Brazilian President and President Lula with setting constant economic growth resulted in Brazil is widely credited. has a similar policy template in the last eight years followed.

"Dilma [Rousseff] has already in continuity with the Lula administration verpfändet.Nun, there is good reason to believe your", said Marcelo Giufrida, President of the Brazilian capital markets Association.

Still, Ms. of Rouseff's stresses the need for new appointments, ongoing expenditure review how the country's economy continued to grow despite the financial crisis in developed economies.

Mr Mantega, who had a reputation for loose expenses and loan terms, said Wednesday after the announcement of his appointment which planned government output controls in 2011 as part of, that net public debt for 30% of GDP over the next four years to reduce to implement aim. Net public debt was 41% from September.

"After we expanded to a recovery by the international financial crisis to assure the time expenditure come to go back to the current issues," said Mantega.

Mrs Rousseff was elected President with 56% 31 votes the Oct.Their campaign was based on two main themes-President Lula to keep largely Orthodox economic policies and closer the current Government commitment for social programs.

While your choice as a mandate for continuity, to be seen the two topics may be contradictory.

"Rousseff represents both good and what is bad about the legacy, Lula", Chief Strategist for Banco Crédit Agricole in São Paulo said Vladimir Vale.

He expressed concern about a trend to higher federal spending as the Government tries to finance both infrastructure development and growing social programs.Mr Vale pointed to the 2011 federal budget which provides against projected a 9.4% increase in expenditure such as economic growth of only 4.5%.

"Fiscal restraint is the biggest test of the new administration, be", former Finance Minister Mailson da said Nóbrega."I am not convinced we go to see it.""Minister of finance Mantega, finally is loosened the reins on the expenditure in recent years."

Speaking with reporters after the announcement, Mr Mantega said a reduction in government spending would interest rates substantially to the Central Bank of the country to help reduce maintain essential for growth, expand employment and alleviate the cost of government debt.One of the highest in the world is currently at 10.75% per year, Brazil's benchmark interest rate.

However, analysts say cut expenditure will be difficult.Mrs Rousseff has vowed to hundreds of billions in New River dams, bullet trains, Olympic stadiums and other projects to verbringen.Inzwischen, workers, increasing political pressure for wage increases in Government's deal while the Mr da Silva years strongly erweitert.Solche reject claims would a blow for women Rousseff popularity, as well as you the difficult task of managing the different political coalition connected together by Mr. Silva address is.

Government spending are not the only Herausforderung.Brasilianische inflation is currently running at 5.47%, Orthodox response to rising prices is well above the target for 2010 of 4.5 %.Geldverknappung but Selic base rate is the Central Bank a towering 10.75%.

Financial markets will probably have to sign up for higher interest rates, even at the cost of some unpopular government bracket.

"" Tombini is very objective,"said Favio Barbosa, President of the Brazilian Association.""With him in for free, the Central Bank will probably follow a hard line against inflation."

Mr Mantega, 61, served in three important posts in the last eight years-planning Minister, President of the Government Development Bank BNDES and since 2006, former Professor holds Finanzminister.Ein he said an economy Ph.d. from the University of Sao Paulo.Bei of press conference on Wednesday, Mr Mantega, that Europe debt difficulties a long-term threat to Brazil sind.Er mentioned, however, that the Government continue to maintain close vigilance on foreign excess liquidity and devaluation of currencies between the countries the he as "currency war" has described

46 Mr. Tombini PhD from the University of Illinois.Er is an experienced officer with an economy currently serves as the Central Bank of chief supervision Offizier.Herr Tombini woman Rousseff said Wednesday assure "complete Central Bank autonomy."Brazilian Central bankers serve at the pleasure of the President and can be dismissed during their tenure.

Mrs Belchior, 52, a former adviser to Mrs Rousseff.Sie has an MBA from Sao Paulo's Getulio Vargas Foundation.

Write toTom Murphy tom.murphy@dowjones.com and Gerald Jeffris at the gerald.jeffris@wsj.com

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