Itaú BBA - Primary deficit of BRL 20.5 billion reais in September

Macro Brazil

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Primary deficit of BRL 20.5 billion reais in September

noviembre 1, 2019

2019 primary result 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 BRL 20.5 billion in September, better than our forecast and market consensus (-23.0 billion and -23.5 billion, respectively). The central government had a deficit of BRL 20.4 billion under the National Treasury’s methodology (which considers the gap between revenues and expenses), better than our -22.2 billion estimate. Under the Central Bank’s methodology (contemplating just the change in the central government’s net debt), the deficit stood at BRL 20.6 billion, while we expected -23.0 billion. Regional governments posted a deficit of BRL 0.2 billion, while state-owned companies showed a surplus of BRL 0.3 billion, delivering results that were close to expectations. The consolidated primary deficit over 12 months receded to 1.3% of GDP from 1.4%.

 The general government’s gross debt slid to 79.0% of GDP in September from 79.8% in August, reflecting lower Central Bank reserves and development bank BNDES reimbursements to the National Treasury. Net debt widened to 55.3% of GDP from 54.8%. Over 12 months, the nominal deficit excluding FX swap transactions receded to 6.3% of GDP from 6.4%. Following the approval of the pension reform, the focus must remain on revising mandatory expenses, such as personnel spending, in order to consolidate a scenario of 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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