Brazil admits strong deterioration of 2023 government finances: primary deficit 2.1% of GDP

Friday, February 2nd 2024 - 03:46 UTC

Full article 10 comments

The administration of president Lula da Silva announced the objective of eliminating its primary budget deficit this year

Brazil had undergone a sharp fiscal deterioration during last year with the central government's primary budget deficit reaching 230.5 billion Reais (US$ 47 billion), released data showed this week. The 2.1% of Gross Domestic Product (GDP), reverses a 0.5% surplus in 2022 and represents the second-largest ever recorded by the country.

The shortfall follows a December primary deficit of 116.1 billion Reais, impacted by 92.4 billion Reais disbursements to settle court-ordered payments.

The administration of president Lula da Silva announced the objective of eliminating its primary budget deficit this year, but markets have been skeptical about the chances of the pledge being fulfilled given the significant fiscal expansion last year.

Treasury Secretary Rogerio Ceron admitted the situation emphasizing that court-ordered payments accounted for a significant portion of the 2023 deficit. “Looking at 2024, we’ve been seeing positive signs, in line with our planning,” he added, highlighting that revenue has outperformed expectations in January.

In 2021, former President Jair Bolsonaro’s government enacted a constitutional amendment in Congress to impose an annual cap on court-ordered payments, leading to an unpaid backlog that the administration of Lula da Silva subsequently addressed.

The 2023 annual deficit reflects a 12.5% increase in real terms in expenditures, while the net revenue of the central government – composed of Treasury, central bank, and Social Security – fell 2.2% during the year.

Excluding the impact of court-ordered payments, the primary deficit for the year would have been 138.1 billion Reais, still exceeding the figures initially indicated by the government, which increased social spending.

Finance Minister Fernando Haddad took office pledging to achieve a deficit equivalent to 1% of GDP this year, or around 100 billion Reais. However, in recent months, he and his team have conceded that this target would no longer be attainable. With new fiscal rules, the administration of Lula projected an even more ambitious deficit of 0.5% of GDP for this year.

Categories: Politics, Brazil.

Tags: Lula da Silva.

Top Comments

Disclaimer & comment rules

Pugol-H
Bras
It says that in 2022, when Bolsonaro was president, there was a surplus of 0.5%.

In 2023, when Lula was president, there was a deficit of 2.1%, ‘the second-largest ever recorded by the country.’

Data doesn’t lie, however much you try and ‘explain it away’.

We shall see what 2024 brings, I predict another whopping deficit not least because of drought and crop failure, although no doubt you will still try and blame Bolsonaro.

You heard it here first.
Feb 03rd, 2024 - 03:31 pm +1
Pugol-H
https://reliefweb.int/report/brazil/unicef-brazil-humanitarian-situation-report-no-2-amazon-drought-22-november-2023#:~:text=There%20are%20an%20estimated%20150%2C000,considered%20the%20worst%20drought%20ever.

‘Since October 2023 in Brazil, all the 62 municipalities in Amazonas state are currently facing a drought emergency. As of 25 October, the State of Pará, adjacent to Amazonas, also declared 20 of its 144 municipalities in emergencies. The affected surface represents between 1,5 and 2 million km², about 20% of Brazil's territory’.

Worst drought is Brazil's recorded history and yet you seem to know nothing about it!!!

Very strange.
Feb 04th, 2024 - 04:40 pm +1
Pugol-H
The drought is getting worse, spreading and affecting everything and it’s becoming an annual event.

https://www.reuters.com/markets/commodities/brazilian-farmers-slow-fertilizer-buys-drought-dampens-corn-planting-plans-2023-12-18/

You’re not preserving anything least of all the Amazon, which you are relentlessly clearing.

What do you think is going to happen to Brazilian agricultural production with this drought weather pattern as the new normal???

Venezuela will look well fed.
Feb 04th, 2024 - 05:18 pm +1

Read all comments

Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!