BRASILIA (Reuters) – The Brazilian government posted a primary budget deficit of 96.1 billion reais ($ 17 billion) in August, the Treasury said on Monday, as the coronavirus crisis continued to require huge spending on ’emergency.
The deficit, excluding interest payments, was slightly lower than the deficit of 98.7 billion reais that economists had predicted in a Reuters poll. The shortfall, excluding interest payments, increased during the first eight months of the year to reach 601.3 billion reais.
This compares to an accumulated deficit of R $ 52.1 billion over the same period last year, the Treasury said.
In the 12 months leading up to August, the deficit stood at R $ 647.8 billion, or 9 percent of gross domestic product, the Treasury said. The government’s forecast for 2020 calls for a record primary deficit of R $ 871 billion, or 12.1 percent of GDP, assuming the economy to contract this year by 4.7 percent.
Net income for the month of August increased by almost 6% in real terms compared to the same month last year to reach 102.1 billion reais, mainly due to the partial cancellation of some carryforwards of taxes, the Treasury said.
Spending in August rose 74% to 198.1 billion reais, the treasury said. This included 93 billion reais for measures to combat the crisis, including 45.3 billion for emergency transfers to millions of the poorest people in Brazil and 15 billion reais for support to local governments.
Gross government debt could reach 94% of GDP this year, well above the emerging market average of 62% of GDP forecast for this year, the Treasury said.
“The crisis facing the country could become a promising time to move reforms forward, focusing on fiscal consolidation and the productivity of the economy,” the Treasury said in a statement.
“Only the continuity of the reform program can maintain an economic environment that will attract investment, with low interest rates and inflation under control, allowing sustainable growth, which is fundamental (…) to control (the) public debt, “he said.
Reporting by Isabel Versiani and Jamie McGeever; Editing by Lisa Shumaker