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Brazil primary budget deficit widens, threatens 2014 goal

Brazil posted a primary budget deficit for a period of 12 months in November, its first in more than a decade and a threat to the government's already reduced fiscal goal for the year, central bank data showed on Monday.

Brazil posted a primary budget deficit of 8.084 billion reais ($3 billion) in November, its largest gap for that month on record. In the 12 months through November, the country had a deficit of 9.234 billion reais, the first such gap since the central bank series started in 2002.

The country's overall budget deficit, which includes debt payments, had a deficit of 41.6 billion in November, its second highest on record. In the 12 months through November, the country posted a deficit of 297.42 billion reais, or the equivalent of 5.82 percent of GDP - the biggest since September of 2003.

The rapid increase in government spending since President Dilma Rousseff took office in 2011 has raised Brazil's debt burden and is threat to its coveted investment credit rating grade. In just a year, Brazil's gross public debt rose nearly 7 percentage points to 63 percent of GDP in November.

At the start of the year, the government aimed for a primary surplus, which represents the public sector's excess revenue over expenditures before debt interest payments, of 99 billion reais or the equivalent of 1.9 percent of gross domestic product for the full year of 2014.

In November, the government reduced its surplus goal to just 10 billion reais, but changes in the 2014 budget bill allows the administration to lower that target even further.

Treasury chief Arno Augustin declined to say whether the government was going to achieve its 2014 goal, but said he expects the central government to post a double digit primary surplus in December.

For the government to meet that goal it needs to save up more than 32 billion reais in December alone.

Rousseff has promised to put the country's finances back in order to regain the trust of investors worried about the fundamental of the once-booming Brazilian economy.

Incoming Finance Minister Joaquim Levy has said the government will tie any future spending to economic growth rates and set more attainable fiscal goals to halt the rise of the country's gross debt.

Copyright Reuters, 2014


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ICT 2014

Foreign Debt $61.805bn
Per Cap Income $1,386
GDP Growth 4.14%
Average CPI 8.6%
Trade Balance $-999 mln
Exports $2.064 bln
Imports $3.063 bln
WeeklyMarch 13, 2015
Reserves $16.273 bln