Itaú BBA - Primary surplus of 7.8 billion reais in October

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Primary surplus of 7.8 billion reais in October

November 30, 2018

Short-term fiscal results are improving


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

The consolidated public sector posted a primary surplus of 7.8 billion reais in October, close to our expectation (8.5 billion) and market consensus (8.1 billion). The central government had a 9.5 billion reais surplus and beat our call (6.3 billion), while regional governments had a deficit of 3.1 billion reais and state-owned companies had a surplus of 0.7 billion reais (we anticipated a surplus of 0.3 billion and a deficit of 0.3 billion, respectively). The consolidated primary deficit accumulated over 12 months narrowed to 1.2% of GDP in October from 1.3% in September. The latest monthly reading confirms the outlook for a better primary result than the target set for the deficit in 2018.

The public sector’s net debt increased to 53.3% of GDP in October from 52.1% in September, while the general government’s gross debt slid to 76.5% from 77.2%. A favorable fiscal scenario depends strictly on the approval of reforms (such as the pension reform) that would 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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