BRASILIA, May 21 ― The Brazilian government plans to freeze a further 5 billion reais (RM5.1 billion) in spending as part of a periodic budget review, two sources said yesterday, adding that official GDP growth estimates will be cut to 1.6 per cent for 2019.

Brasilia will unveil its second bi-monthly report on federal revenue and expenditure tomorrow, with a fresh round of spending freezes needed because the country's stagnant economy is reducing government revenues.

By law, the government must review its accounts every two months, specifying whether it should freeze or proceed with spending to meet its budget targets. The administration's first such report on March 22 called for 30 billion reais of spending initially planned for this year to be postponed.

Brazil is not officially in recession, but with the economy likely having contracted in the first quarter, it may be half way there. Last week, Economy Minister Paulo said he expected 2019 growth of 1.5 per cent, down from a previous forecast of 2.2 per cent.

However, the two sources said it would instead be cut to 1.6 per cent.

Nonetheless, polls suggest the government's projection may be far too optimistic.

Brazil's economy is expected to grow by just 1.24 per cent this year, according to a regular central bank survey published yesterday, the bleakest outlook so far this year. That median forecast was down from 1.45 per cent the week before, and well over a full percentage point down from 2.55 per cent predicted in January. ― Reuters