BRASILIA (Reuters) - Brazil’s government on Wednesday revised its 2020 primary budget deficit forecast to 787.4 billion reais ($154 billion) in its latest bimonthly revenue and expenditure report, from a 540.5 billion reais shortfall projected in the last report in May.
The wider deficit is almost entirely a result of the emergency spending measures taken to mitigate the coronavirus-related shock to the economy, with the outlook for revenues barely changed from two months ago.
This implies a deficit, excluding interest payments, of 11% of gross domestic product, according to the figures in the report. Waldery Rodrigues, special secretary to the ministry, said this will likely be reduced in new official forecasts to be published on July 31.
“That 787.4 billion will be used as an input into the new forecasts. Our expectation is the deficit estimate from earlier this month will be lower,” he said in an online response to journalists’ questions.
Fluctuations in the exchange rate, inflation and oil prices, as well as the government using its central GDP outlook of -4.7% as the basis rather than the recent market consensus of -6.5%, should result in a narrower 2020 deficit, Rodrigues said.
Earlier this month, the Economy Ministry said it projected a central government primary deficit of 795.6 billion reais, or 11.5% of gross domestic product, and a wider public sector deficit of 828.6 billion reais.
In the bimonthly revenue and expenditure report published on Wednesday, the ministry kept its primary revenue estimate steady at 1.2 trillion reais from the last report’s 1.21 trillion reais, and raised its primary spending forecast by 229.3 billion reais to 1.98 trillion reais.
Earlier on Wednesday, Treasury Secretary Bruno Funchal said the wider public sector primary deficit will probably come in around 12% of GDP this year, easily the widest deficit on record.
Reporting by Jamie McGeever, Editing by Franklin Paul, Bernadette Baum and Jonathan Oatis