Brazil posts first August primary budget deficit in over ten years

Wednesday, October 2nd 2013 - 07:51 UTC

Full article 3 comments

The government of President Dilma Rousseff is giving priority to growth

Brazil posted its first primary budget deficit for the month of August in more than a decade, central bank data showed on Monday, pointing to a deterioration in the country's finances that is worrying investors and rating agencies.

Brazil posted a primary budget deficit of 432 million Reais (194.07 million dollars) in August.

The primary budget balance, which represents the public sector's excess revenue over expenditures before debt payments, was expected to reach a surplus of 1.85 billion Reais, according to the median forecast of ten analysts surveyed. Primary surplus in July was 2.3 billion Reais.

The primary balance is closely watched by investors because it measures a country's ability to service its debt. The government missed its primary surplus target in 2012 and will miss it again this year as a series of tax breaks aimed at reviving the economy hits revenues. The country posted a nominal budget deficit of 22.3 billion Reais in August.

Rating agencies have warned that smaller primary surpluses could threaten the country's debt dynamic and trigger a credit downgrade in the future.

In the 12 months through August, the primary surplus was equivalent to 1.82% of GDP, down from the 1.91% posted in July.

Even with deteriorating government finances, the public sector's net debt fell in August to 33.8% of GDP versus 34.1% the previous month.

Categories: Economy, Politics, Brazil.

Tags: Brazil.

Top Comments

Disclaimer & comment rules

Brasileiro
The debt falls because Brazil bought many cheap dollars and now sell with a profit margin stunning. Very clever. Reduces the debt and irrigates the economy with Real fresh and healthy. It's called “countercyclical economic policy”. Very different from the USA that irrigates the economy with more debt.
Oct 02nd, 2013 - 09:33 am 0
yankeeboy
The worm has turned. Brazil better start to batten down the hatches and stop with the overly generous subsidies.
Oct 02nd, 2013 - 12:03 pm 0
ChrisR
1 Brasileiro

BUT, what did it cost to hold these dollars in lost interest or not paying for useful projects like having doctors for everybody?

You look at things in a very, very, simple way.
Oct 02nd, 2013 - 05:10 pm 0

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!