In a surprising turn of events, Brazil’s central government reported a primary budget deficit of 9.283 billion reais ($1.66 billion) for July, exceeding economists’ forecasts. Official data released on Thursday revealed a shortfall larger than the anticipated 8.8 billion reais.
Despite a notable 9.5% increase in net revenue, which rose to 183.5 billion reais in real terms, government spending outpaced revenue growth. July’s expenditures totaled 192.8 billion reais, marking a 6% reduction from previous levels, yet still surpassing revenue inflows.
The fiscal imbalance for the 12-month period ending in July reached 233.3 billion reais, equating to 2.04% of Brazil’s Gross Domestic Product (GDP). This figure remains significantly above the government’s ambitious goal of eliminating the deficit within the year. The target allows for a margin of 0.25% of GDP, which translates to an upper limit of approximately 29 billion reais for the annual deficit.
Treasury Secretary Rogerio Ceron addressed the media, attributing the current deficit to an intentional buildup of expenditures in the early months of the year. Ceron indicated that the financial landscape is expected to improve, with August’s tax revenue showing promising strength.
Looking ahead, Ceron hinted at potential new revenue measures, which could be introduced in the upcoming bimonthly revenue and expenditure report later this month. These measures aim to steer the deficit towards the government’s fiscal targets for the year.
