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Brasília - With its biggest budget in 15 years, the Housing secretariat at the Ministry of Cities will face the challenge of spending its money well in 2005. There will be US$4.1 billion (R$11.2 billion) available for housing, sanitation and infrastructure, an increase of 33% over the 2004 budget, and almost 60% more than in 2003.


Jorge Hereda, the head of the secretariat, explains that even so there remains a shortfall. "What we need to eliminate Brazil's housing deficit is US$5.2 billion per year over a 20 year period," he says, adding that it will be important not to do what happened this year when 7% of the housing budget (around US$208 million) went unspent. That was enough money to build 80,000 homes. Hereda blames operational problems in states and municipalities for that.


The 2005 budget has earmarked US$7.8 million for the construction of some 3,000 homes for Indians.


Hereda says that the major obstacle to more spending on housing is the fact that such expenditures affect the primary account, reducing the surplus the government is committed to achieving because of contracts with multilateral financial organizations, such as the International Monetary Fund. In 2005, it is possible that such spending will no longer affect the primary account if a Brazilian proposal is accepted by the IMF.


Brazil made its proposal for changes in primary account accounting at the World Urban Forum in Spain last September. "We have to spend money in order to achieve the Millennium Goals. What we need is special treatment for such expenditures," explains Hereda. A final decision on the Brazilian proposal to exclude spending on housing (and other infrastructure) from primary account calculations as expenditures should be made in April at a meeting of the UN Commission of Sustainable Development.


One of the Millennium Goals is to improve the well-being of the poor who live in slums. Brazil has around 4,000 slum areas where some 1.7 million people live.


Agência Brasil

Reporter: Cecília Jorge

Translator: Allen Bennett

12/22/2004