MercoPress. South Atlantic News Agency
Brazil reports its worst half year primary deficit since 1997
Last week the government lowered its fiscal targets and this prompted ratings agency S&P to threaten to downgrade Brazil’s investment-grade rating. The Brazilian government registered a primary deficit of $470 million (1.6 billion Real) in the first half of 2015, according to figures from the National Treasury release on Thursday, O Globo newspaper reported. The deficit is the worst result since 1997. In the same period last year, the government recorded a surplus of $5 billion (17 billion real).
“The deficit comes from the drop in federal revenues and the fact that budget cuts are still waiting to be approved,” said Rodrigo Zeidan, associate professor of economics and finance at Brazil’s Fundação Dom Cabral business school.
Last week, the government’s economic team reduced its primary surplus budget target for the year from 1.2% of GDP to 0.15% of GDP. The change was met with a negative reaction from the markets and saw the currency plunge to a 12-year low to 3.34 Real against the dollar.
The move also prompted ratings agency Standard & Poor's to threaten to downgrade Brazil’s investment-grade rating. Brazil’s current economic woes are compounded by the end of the commodity boom and a huge corruption scandal at the state-run oil giant Petrobras.
After nearly 12 years of positive growth - including a peak of 7.5% GDP in 2010 - the economy is expected to shrink by least 1.5% this year with mixed opinions on whether it will return to growth in 2016, when Brazil will host the 2016 Olympic and Paralympics' Games.
Top Comments
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Read all commentsThey must give up the crazy cash back schemes and the free money to slum dweller programs immediately.
Aug 01st, 2015 - 12:15 pm 0My guess is Congress won't let them
Bank head will resign when he's asked to devalue and cut interest rates.
Just give it time...
Meanwhile, across the world the United States had a budget deficit of 800 billion dollars. The Brazil was 500 million dollars.
Aug 01st, 2015 - 01:26 pm 0The difference is simply stunning. 1600 times!
How many times the economy of the Evil Empire is greater than that of Brazil? 7 or 8?
The United States is fucked! These guys do not rise more ever.
The USA is much larger, wealthier, smarter, more innovated and harder working than Brazil.
Aug 01st, 2015 - 02:15 pm 0We rule the world Bras.
You're nothing more than a bunch of Marxists Monkeys that can barely communicate with the civilized world.
Watch Argentina, you're about 5 years behind and Argentina is about 2 years behind Venezuela which is currently having food riots.
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