Brazil Central Government Primary Deficit Jumps 37.7% In February

• Brazil's central government reported a sharp deterioration of its budget in February. Treasury data showed that increased revenues were unable to offset the negative impacts of a significant growth in expenses.
• The central government's primary budget deficit reached 58.4 billion reais ($11.7Bn) in February, a 37.7% surge in real terms over the same month a year ago. Total spending expanded by 27.4% over February 2023, to 190.9Bn reais, mainly influenced by 30.1 billion reais in court-ordered debt payments, said the Treasury.
• Treasury Secretary Rogerio Ceron said that court-ordered debts are typically paid in May or June, and the decision to anticipate them distorted the comparison with total expenditures from February last year.
• Meanwhile, net revenue increased by 23.4% from the same month a year ago, to 132.5 billion reais. The government had already said that tax revenue for February had been a record for the month, helped by the taxation of closed-end funds and the reinstatement of federal taxes on fuels.
• The government is relying on a revenue boost to erase the primary deficit this year, a goal that is still viewed with skepticism by the market. Last week, the Planning and Finance ministries worsened their projection for public accounts, but still kept it in line with the target of a primary deficit equivalent to 0% of gross domestic product (GDP).
• The market, in turn estimates that the deficit will reach 0.75% of GDP, according to a central bank weekly survey. Year-to-date, the central government recorded a primary surplus of 20.9Bn reais, smaller than the 38.3 billion reais surplus from a year ago, fundamentally affected by higher spending.
• By mid-April, the government is expected to submit to Congress the fiscal target for next year, after indicating it would pursue a primary surplus of 0.5% of GDP in 2025 and 1% of GDP in 2026.

(Source: Reuters)