Itaú BBA - Primary deficit of 24.6 billion reais in September

Macro Brazil

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Primary deficit of 24.6 billion reais in September

octubre 29, 2018

Fiscal result for the year should be better than the target


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

The consolidated public sector posted a primary deficit of 24.6 billion reais in September, slightly worse than our expectation (-23.0 billion) and market consensus (-22.0 billion). Regional governments had a deficit of 0.8 billion reais, while state-owned companies had a surplus of 0.5 billion reais, printing close to our expectations. The main difference vs. our forecast was caused by a greater distortion between the result published by the National Treasury last week (“above the line,” with a deficit of 23.0 billion reais) and the result published by the Central Bank (“below the line,” with a deficit of 24.2 billion reais). The consolidated primary deficit accumulated over 12 months widened to 1.3% of GDP in September from 1.2% in August. 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 52.2% of GDP in September from 51.2% in August, while the general government’s gross debt slid to 77.2% from 77.3%. 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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