Itaú BBA - Primary deficit of BRL 131.4 billion in May

Macro Brazil

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Primary deficit of BRL 131.4 billion in May

junio 30, 2020

Fiscal accounts will deteriorate in 2020


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

 The consolidated public sector posted a primary deficit of BRL 131.4 billion in May, close to market consensus (BRL 129.7 billion) and our forecast (BRL 132.8 billion). The central government registered a deficit of BRL 126.6 billion according to the National Treasury’s methodology (which considers the gap between revenues and expenses), better than our BRL 133.0 billion estimate. Excluding revenue and expense measures implemented to fight the coronavirus crisis, the primary deficit would be BRL 42.9 billion. Regional governments, on the other hand, posted a larger-than-expected deficit of BRL 4.8 billion (vs. a zero estimate), while state-owned companies delivered a BRL 0.4 billion surplus. The consolidated primary deficit over 12 months widened to 3.9% from 2.3% of GDP. 

 The general government’s gross debt climbed to 81.9% of GDP in May from 79.8% in April, while net debt rose to 55.0% of GDP from 52.8%. Over 12 months, the nominal deficit excluding swap transactions widened to 8.0% from 6.7% of GDP. Contracting economic activity and measures implemented to cushion the impact of the coronavirus crisis will cause sharp deterioration in fiscal results in 2020, but it is vital not to create permanent expenses, so that the gradual fiscal adjustment enabled by the spending cap constitutional amendment can resume from 2021 onwards.
 

Pedro Schneider 


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



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