Despite improvement, Brazil far from going back to black

Brazil’s Congress approved the federal budget for 2020, the first proposed by the Jair Bolsonaro administration. The forecast indicates gradual improvement to Brazil’s public accounts, with a fiscal target of a BRL 124.1 billion deficit being the lowest since 2016. However, it still means the Brazilian government will remain in the red for the sixth year running, so perhaps there is less of a reason to celebrate.

Revenue was pegged at BRL 3.687 trillion, including BRL 7 billion in dividends from state-owned companies and the optimistic expectation of a GDP growth of 2.32 percent—above market expectations of 2.25 percent growth. 

However, almost all of that revenue has already been allocated. This year, lawmakers pushed through legislation to force the Executive to honor parliamentary grants on the federal budget, giving the government even less room to maneuver. According to the Senate’s official news website, BRL 9.4 billion in grants have been approved for next year and are non-negotiable. For comparison, non-mandatory expenses—such...