Itaú BBA - Primary deficit of 15.6 billion reais in November

Macro Brazil

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Primary deficit of 15.6 billion reais in November

diciembre 28, 2018

2018 Primary result should be much better than the target

For the version with all charts and tables, please open the attached pdf file
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The consolidated public sector posted a primary deficit of 15.6 billion reais in November, which was narrower than our expectation (-18.2 billion) and in line with market consensus (-15.5 billion). The central government had a deficit of 16.2 billion reais, as expected, while regional governments had a surplus of 2.0 billion reais and state-owned companies had a deficit of 0.2 billion reais (we anticipated a deficit of 0.8 billion and a surplus of 0.2 billion, respectively). The consolidated primary deficit accumulated over 12 months deteriorated to 1.5% of GDP in November from 1.2% in October. The latest monthly reading confirms the outlook for a better primary result than the target set for the deficit in 2018.

The general government’s gross debt increased to 77.3% of GDP in November from 77.0% in October, while the public sector’s net debt slipped to 53.3% of GDP from 53.6%. 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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