Brazil's Government Hikes Estimate For 2023 Budget Deficit

  • Brazil's finance ministry forecasts a primary budget deficit of 136.2 billion reais ($27.22 billion) this year, compared to 107.6 billion reais projected in March, according to its bi-monthly revenue and expenditure report released on Monday.
  • According to the report, this year's budget is 1.7 billion reais over the spending ceiling, indicating the government would need to find additional funds elsewhere.
  • While Brazil's target for the 2023 primary deficit sits at 228.1 billion reais, Finance Minister Fernando Haddad has promised to reduce it to a deficit goal of around 100 billion reais, via spending cuts and seeking new revenue streams.
  • This comes at a time when the government's proposed fiscal framework targets a zero primary deficit in 2024, followed by a primary surplus equal to 0.5% of GDP in 2025 and 1% of GDP in 2026 as mandated by the country‚Äôs new fiscal reform mandate.
  • To achieve this goal, the government must balance public accounts by limiting spending to create a new horizon for economic and social development by declining debt while preserving social and investment spending over time.

(Source: Reuters)