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  HOME | Brazil (Click here for more)

As Economic Malaise Grows, Brazil Budget Deficit Hits All Time Record
June’s result means that the government's budget deficit reached a record breaking 8.1% of GDP -- one of the highest across emerging and developed economies and the highest in Brazil since the beginning of current data in 1995.

RIO DE JANEIRO -- Brazil's consolidated public sector posted a significant primary deficit in June, with the central government reporting a primary deficit of BRL8.6 billion.

June’s result means that the government's budget deficit reached a record breaking 8.1% of GDP -- one of the highest across emerging and developed economies and the highest in Brazil since the beginning of current data in 1995.

The deficit has been worsening this year as lower oil prices, a Petrobras corruption scandal, and a poor economy bite, continuing a downward trend from -0.6% of GDP in December 2014 to -0.8% of GDP in June 2015.

The government's efforts to tighten fiscal policy have been unable to halt the deterioration in fiscal accounts, since both interest payments and the primary deficit have increased substantially since December.

The increase in the deficit occurred despite the net gains generated from FX swap operations, which benefited from the appreciation of the BRL.

In July, however, the depreciation of the BRL (around 9.5%) will foster a reversal of that more positive result, implying the deterioration in accounts will continue.

Even considering the newly adjusted fiscal target (BRL8.7 billion, from previous from BRL66.3 billion), the recent monthly results suggest that the government will have to adjust its budget again before year-end.


 

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