Brazil central government primary deficit jumps 37.7% in February By Reuters

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BRASILIA (Reuters) – Brazil’s central government reported a large deficit in its budget in February, Treasury data showed on Tuesday, with increased spending that could not solve the problems caused by high growth rates.

The central government’s primary debt reached 58.4 billion reais ($11.7 billion) in February, an increase of 37.7% in real terms over the same month last year.

Total revenue increased by 27.4% in February 2023, to 190.9 billion reais, mainly due to 30.1 billion in repayment of debts ordered by the court, said Treasure.

Finance Secretary Rogerio Ceron said court-ordered loans are usually paid in May or June, and the decision to wait for them distorted the comparison with the total amount spent since February last year.

Meanwhile, total revenue increased by 23.4% from the same month last year, to 132.5 billion reais.

The government had previously said that February’s tax revenue was a record for the month, helped by a tax on closing costs and the restoration of federal taxes on fuel.

The government is counting on fiscal stimulus to meet this year’s first deficit, a goal that the market remains skeptical of.

Last week, the ministries of Planning and Finance raised their expectations for the public accounts, but kept them in line with the target of a large deficit equal to 0% of gross domestic product (GDP).

The market estimates that the deficit will reach 0.75% of GDP, according to the central bank’s midweek survey.

Year-on-year, the central government recorded a surplus of 20.9 billion, less than the 38.3 billion surplus of the previous year, which was mainly affected by high spending.

By mid-April, the government is expected to present to Congress what it wants to achieve next year, after showing that it will have 0.5% of GDP in 2025 and 1% of GDP in 2026.

When asked about the feasibility of these goals, Ceron replied that achieving them is “a relative discussion if we are on the road to financial recovery.”

($1 = 4.9840 reais)

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