June 12, 2020 / 8:29 PM / 22 days ago

Brazil deficit to reach $140 billion this year -survey

BRASILIA, June 12 (Reuters) - Economists expect Brazil’s government to post a primary budget deficit this year of 709 billion reais ($140 billion), about 24% wider than the 571 billion-reais shortfall forecast just a month ago, the Economy Ministry said on Friday.

The record deficit for the central government, comprising the Treasury, central bank and social security system, reflects the rapid increase in spending and fall in revenues resulting from the coronavirus crisis.

The estimate in the ministry’s monthly “PRISMA” fiscal report is wider than the government’s last official forecast of 675.7 billion reais, expected to be 9.4% of gross domestic product.

Officials have said in recent weeks, however, that the deficit could be even wider, given the scale of the looming recession and hit to tax revenues.

Either way, the deficit will be significantly greater than the government’s original target of a 124 billion reais at the start of the year.

The PRISMA survey also showed that economists now expect a 200 billion-reais deficit next year, excluding interest payments, compared with the median forecast of a 169 billion-reais shortfall a month ago. The government expects a 150 billion-reais deficit in 2021.

As a result, Brazil’s gross debt is now expected to rise to a record 92.7% of GDP this year, up from 90% in last month’s survey, and 92.8% of GDP next year, also up from May’s 88.6% forecast, according to the PRISMA report. ($1 = 5.0416 reais) (Reporting by Jamie McGeever; editing by Jonathan Oatis)

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