Itaú BBA - Primary deficit of 14.9 billion reais in February

Macro Brazil

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Primary deficit of 14.9 billion reais in February

March 29, 2019

The general government’s gross debt increased marginally to 77.4% of GDP in February.

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

 The consolidated public sector posted a primary deficit of 14.9 billion reais in February, slightly below our call (15.5 billion) and in line with market consensus (14.7 billion). The central government had a deficit of 18.3 billion reais (close to our 17.8 billion estimate) while regional governments and state-owned companies posted higher-than-anticipated surpluses of 4.8 billion reais and 0.8 billion reais, respectively. The consolidated primary deficit over 12 months receded to 1.5% of GDP in February from 1.6% in January. In our view, meeting the public sector’s annual primary deficit target of 132 billion reais requires discipline, but shouldn’t be so challenging.

• The general government’s gross debt increased marginally to 77.4% of GDP in February from 77.3% in January, while the public sector’s net debt remained at 54.4% of GDP. Over 12 months, the nominal deficit excluding FX swap transactions remained at 6.9% of GDP. 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



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