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priority programs and proposes integrated investment actions (federal, local, public and private) worth R$317 billion for nine geographic areas or "development hubs". 1.48
For the year 2000, under the fiscal adjustment program, budgetary allocations for the executive (not including social security, transfers to subnational governments, or payroll) total R$37.7 billion (3.51% of GDP, compared with 4.27% in 1998 and 3.52% in 1999). Of that amount, 67% is earmarked for social development (42% for health, 22% for labor and employment, 7% for education, 7% for social welfare, 3% for sanitation and housing, and 3% for agricultural organization); 7% for the productive sector; and 6% for infrastructure (80% for transportation, 13% for energy, and 7% for communications).
1.49
Macroeconomic outlook. The forecasts presented in Table 1 rest on a number of core assumptions. The first is that the fiscal adjustment effort will continue. This would help reduce the nominal deficit quickly, from 10.3% of GDP in 1999 to 5.2% in 2000 to 3.8%, on average, in 2001-2004. With this lower deficit, inflation (measured as the percentage change in the implicit GDP deflator) could be brought down to 3.6% in 2000 and hold fairly steady at 4.7%, on average, between 2001 and 2004.
1.50
The main premise for the marked improvement in the balance of payments posited in the table is that the country would close the period with a US$14.1 billion trade surplus, after reporting a US$1 billion deficit in 1999. Driving the improvement would be export growth (as a result of the new exchange-rate system), further productivity gains, and a recovery of external demand. This latter factor, it should be noted, will depend not just on stronger economic activity in Brazil's trading partners but also on better access for Brazilian products in those markets. These trends would gradually lift the flat growth rates of 1998-1999, with real GDP growth averaging 4.4% in 2001-2004.