Brazil’s June Fiscal Deficit Hits R$38.8 Billion, Exceeds Market Forecasts

Brazil’s Central Government reported a significant fiscal deficit of R$38.836 billion (US$6.87 billion) in June.

This marks a continued economic strain, despite being an improvement from May’s R$60.983 billion (US$10.79 billion) deficit.

Analysts had expected a slightly smaller deficit of R$37.7 billion (US$6.67 billion). The figure includes activities from the National Treasury, Social Security, and Central Bank.

June’s results surpassed financial forecasts, showing the weakest performance since the series began in 1997. For context, June last year posted a deficit of R$45.223 billion (US$8 billion).

Cumulatively, the year-to-date deficit stands at R$68.698 billion (US$12.15 billion), the most substantial since 2020.

This figure starkly contrasts with last year’s R$42.509 billion (US$7.52 billion) deficit at this point. Nevertheless, June’s revenue rose by 8.2% compared to last year.

The first half-year increase reached 8.5%. Conversely, expenses increased only 0.3% in June, after adjusting for inflation, with a six-month rise of 10.5%.

Over the past 12 months, the deficit totaled R$260.7 billion (US$46.13 billion), or 2.29% of Brazil’s GDP.

The government closely monitored spending, with mandatory expenses at 18.5% of GDP and discretionary spending at 1.8%.

For 2024, the government still targets a primary fiscal balance, aiming for zero impact on GDP, though not many experts believe that they will achieve that.

The permissible variation is slight. The spending cap is set at R$2.089 trillion (US$369.56 billion).

The Ministry of Planning and Budget anticipates a year-end deficit of R$28.8 billion (US$5.09 billion), aligning with the 0.25% GDP target.

Brazil’s June Fiscal Deficit Hits R$38.8 Billion, Exceeds Market Forecasts

In breakdowns, the National Treasury and Central Bank saw a primary surplus of R$6.063 billion (US$1.07 billion) in June.

The Treasury’s year-to-date surplus totals R$129.524 billion (US$22.92 billion).

However, Social Security recorded a R$44.899 billion (US$7.94 billion) deficit last month, cumulating to R$198.221 billion (US$35.09 billion) for the half-year.

The Central Bank also faced a June deficit of R$152 million (US$26.9 million) and R$269 million (US$47.61 million) over six months.

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