BRASILIA (Reuters) - Brazil’s national debt could top 100% of gross domestic product and the government’s primary deficit will probably rise above 15% of GDP, Economy Minister Paulo Guedes said on Tuesday, as the coronavirus crisis blows a large hole in public finances.
This was among the gloomiest of any scenario outlined for Brazil’s fiscal health this year, and was significantly more pessimistic than the government’s current official forecasts, which could be revised later in the day.
Speaking in virtual testimony to a congressional public hearing, Guedes also said the government would extend emergency payments to low-paid workers for three months, but did not say by how much.
The current rate is 600 reais ($109) a month, and government officials have said extending the stipend by the same amount is unaffordable.
Speaking shortly after official figures showed that Brazil’s debt and deficit reached record levels in May, Guedes told lawmakers that the primary deficit this year excluding interest payments would be “very high, very high.”
The government’s current official debt and deficit forecasts are 93.5% and 9.9% of GDP, respectively.
Guedes dismissed some of the more pessimistic economic forecasts, including the International Monetary Fund’s projection that GDP will fall 9.1%, and said the downturn was nowhere near morphing into depression.
“I wouldn’t say Brazil’s GDP will drop 9%, 10%. Nor can I say if we are going to start growing fast. What I do say is that we still have the chance to rebound much faster than everyone is predicting,” he said.
He pointed to concessions in the electricity, oil and other sectors that the government is waiting to open up once the worst of the crisis is over, and said private sector investment on several fronts would be unlocked in the coming two to three months.
Reporting by Marcela Ayres and Jamie McGeever; Editing by Bernadette Baum