RIO DE JANEIRO, BRAZIL – Brazil’s government on Thursday cut its 2021 primary budget deficit forecast, based on a bi-monthly revenue and expenditure report which showed an expected jump in tax revenues on the back of stronger economic growth.
The Economy Ministry now expects a deficit excluding interest payments of R$155.4 billion (US$30 billion) this year, or 1.8% of gross domestic product, down from R$187.7 billion, or 2.2% of GDP, in May’s report.
It raised its 2021 net revenue forecast by R$43.1 billion to R$1.476 trillion and increased its primary spending forecast by R$10.8 billion to R$1.632 trillion.
Brazil registered a record tax take in the first half of the year, figures this week showed. The Economy Ministry said in its latest report on Thursday that it now has the flexibility to free up an additional R$4.5 billion in this year’s budget.
The new forecasts are based on the government’s latest economic growth forecast for this year of 5.3%, revised up last week from 3.5%.
Following the government’s decision to extend emergency cash transfers to millions of the country’s poorest and most vulnerable people through October, the Economy Ministry now expects ‘extraordinary credit’ expenditure this year to rise by R$25.4 billion from May’s estimate to R$124.9 billion.
Extraordinary credits cover spending related to fighting the coronavirus pandemic, mainly emergency transfers, which are not subject to the usual budget rules.