Tax Revenue Surge Boosts Brazil’s Fiscal Health in Late 2024

The National Treasury of Brazil reported a significant improvement in the country’s fiscal position. The central government recorded a primary deficit of R$ 4.515 billion ($0.75 billion) in November 2024.

This figure marks a substantial reduction from the R$ 38.071 billion ($6.35 billion) deficit in November 2023. Financial analysts had predicted a deficit of R$ 6.6 billion ($1.1 billion) for the month.

The actual result surpassed these expectations. The government achieved this outcome through a combination of increased revenue and reduced spending.

The Treasury data revealed a 16.5% real increase in net revenue compared to the previous year. Simultaneously, total expenses decreased by 6.3% in real terms. These factors contributed to the narrowing deficit.

The Federal Revenue Service collected 14% more in taxes than in the same period last year. This increase reflects growing economic activity in Brazil. The non-tax revenues also saw a significant boost of 39.5%.

Concessions played a crucial role in boosting non-tax revenues. They jumped from R$ 228.9 million in November 2023 to R$ 4.732 billion ($0.79 billion) in November 2024.

Dividends also increased substantially, rising from R$ 3.438 billion ($0.57 billion) to R$ 7.763 billion ($1.29 billion). The government saw higher collections from various taxes.

These included PIS/Cofins, Import Tax, and Tax on Industrialized Products (IPI). The increased tax revenue indicates a revival in industrial and import activities.

On the expenditure side, the government reduced financial support to states and municipalities. This reduction contributed significantly to the overall decrease in spending.

Brazil’s Fiscal Discipline and Economic Progress

The government demonstrated fiscal discipline through these targeted cuts. The November 2024 result represents the best performance for this month since 2021.

In that year, the government had recorded a surplus of R$ 4.869 billion ($0.81 billion), adjusted for inflation. For the first eleven months of 2024, the central government accumulated a deficit of R$ 66.827 billion ($11.14 billion).

This figure shows improvement from the R$ 112.466 billion ($18.74 billion) deficit in the same period of 2023. The government aims for a zero primary deficit in 2024.

It allows for a tolerance of 0.25% of GDP, equivalent to about R$ 29 billion ($4.83 billion). The November results bring this goal closer to reality. The Treasury usually releases November data in late December.

However, they presented these figures with a delay this year. The reasons for this delay remain unclear. These results signal a potential turning point in Brazil’s fiscal management.

They demonstrate the government’s commitment to fiscal responsibility and economic growth. The coming months will reveal if this positive trend continues.

LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.