Brazil Could Register Largest Primary Deficit Ever in 2015

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – The government of Brazil is expected to announce a revision in its 2015 budget on Friday from a primary surplus of R$8.74 billion to a primary deficit of between R$70-75 billion, according to the Chief of Staff’s office. The revised volume will be the largest annual deficit in history for Brazil.

“We are estimating this (deficit),” Chief of Staff Jaques Wagner told reporters on Thursday afternoon. “If additional revenues come in, great, [the deficit] will be smaller.”

Wagner, earlier in the day had announced that the budget revision would show a deficit of R$50 billion but the amount did not include overdue Treasury loans to state-owned banks.

Later in the afternoon, the government decided to ‘be safer’ and include the estimated R$40 billion debt in the deficit calculations. According to the office, the government received indications that the Federal Accounts Court (TCU) would require the debt to be paid in a lump sum and not in installments.

The debt with state-owned banks is one of the items that caused a great many headaches to administration officials in the past weeks. According to the TCU, the government manipulated its accounts by obtaining money from these banks to pay for its social programs while not registering them as expenditures.

In the beginning of October the TCU recommended to Congress the rejection of the 2014 budget accounts.

If Congress accepts the TCU’s recommendation it could open up the way for charges of lack of compliance with the Fiscal Responsibility Law and the possibility of impeachment proceedings against the President.

The Administration will have to send this latest revision of the 2015 budget to Congress to be approved.