Brazil's cuts look big but off-balance sheet spending still key

Last night’s announcement of budget cuts worth R$50bn (1.3% of GDP) should mean that Brazil’s government meets – or perhaps even betters – its ‘official’ target for the primary budget surplus of 3% of GDP this year. But the ultimate success of the planned squeeze in terms of cooling growth and inflation will hinge on whether the government can slow off-balance sheet spending, notably lending by the state development bank, BNDES.