Brazil’s Budget Deficit Higher Than Expected

BRASILIA (Reuters) – Brazil’s central government reported a primary budget deficit higher than anticipated, according to official data released on Thursday, despite a notable increase in public revenues.

The deficit for July was 9.283 billion reais ($1.66 billion), surpassing economists’ expectations of an 8.8 billion real shortfall, as per a Reuters poll.

Net revenue grew by 9.5% in real terms to reach 183.5 billion reais. However, expenditures exceeded this growth, totaling 192.8 billion reais, despite a 6% decrease in spending.

Over the 12 months ending in July, the total deficit reached 233.3 billion reais, which is about 2.04% of Brazil’s gross domestic product (GDP). This figure is significantly above the government’s target of reducing the deficit to zero this year, which has a tolerance margin of 0.25% of GDP, indicating that the year-end deficit could be around 29 billion reais.

During a news conference, Treasury Secretary Rogerio Ceron stated that the annual figures reflect a strategy of significant spending in the earlier months of the year. “Now the trend is starting to reverse,” he mentioned, while also noting that August’s tax revenue, upcoming in an official release later this month, appears strong.

Ceron indicated that the government is preparing new revenue measures if needed to meet this year’s targets. These potential measures might be detailed in the upcoming bimonthly revenue and expenditure report later this month.

($1 = 5.5804 reais)