Itaú BBA - Primary deficit of 108 billion reais (1.6% of GDP) in 2018

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Primary deficit of 108 billion reais (1.6% of GDP) in 2018

January 31, 2019

Fiscal challenges remain

For the version with all charts and tables, please open the attached pdf file
 

• The consolidated public sector posted a primary deficit of 108 billion reais in 2018 (-1.6% of GDP), beating the annual target of 161 billion reais (-2.4% of GDP) and close to the 2017 result of 111 billion reais (-1.7% of GDP). The central government had a deficit of 120 billion reais (-1.8% of GDP) vs. a target of 159 billion reais (-2.3% of GDP), while regional governments and state-owned companies posted surpluses of 3.5 billion reais and 4.4 billion reais, beating targets that were a surplus of 1.2 billion and a deficit of 3.5 billion reais, respectively. In December, the public sector had a primary deficit of 41.1 billion reais (expected: -37.7 billion), while the central government posted 31.8 billion reais (expected: -31.6 billion).

• The general government’s gross debt increased to 76.7% of GDP in 2018 from 74.1% in 2017, while the public sector’s net debt rose to 53.8% of GDP from 51.6% in the previous year. The nominal deficit narrowed to 7.1% of GDP from 7.8% in 2017, reflecting lower interest expenses. A favorable fiscal scenario depends strictly on the approval of reforms, such as the pension reform, that signal a gradual return to primary surpluses that are compatible with structural stabilization in public debt.
 

Pedro Schneider
 

For the version with all charts and tables, please open the attached pdf file



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