Itaú BBA - Primary deficit of BRL 94.3 billion in April

Macro Brazil

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Primary deficit of BRL 94.3 billion in April

mayo 29, 2020

The consolidated primary deficit over 12 months increased to 2.3% from 0.9% of GDP.


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

 

 The consolidated public sector posted a primary deficit of BRL 94.3 billion in April, which was close to market consensus (BRL 96.6 billion) and our forecast (BRL 95.0 billion). The central government experienced a deficit of BRL 92.9 billion under the National Treasury’s methodology (which considers the gap between revenues and expenses), better than our BRL 111 billion estimate. Excluding revenue and expense measures to fight the coronavirus crisis, the primary deficit would have been BRL 4.8 billion. Regional governments posted a deficit of BRL 1.9 billion (vs. an anticipated zero balance), while state-owned companies delivered a BRL 0.2 billion deficit. The consolidated primary deficit over 12 months increased to 2.3% from 0.9% of GDP.  

 The general government’s gross debt climbed to 79.7% of GDP in April from 78.5% in March, and the net debt increased to 52.7% of GDP from 51.7%. Over 12 months, the nominal deficit excluding swap transactions widened to 6.6% of GDP from 5.5%. 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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