Zero-deficit still possible in 2024, Brazilian government says

The Brazilian government has worsened its primary deficit projections for this year to BRL 14.5 billion (USD 2.83 billion), still BRL 5.2 billion up from the previous forecast from March but still within the target range of 0.1 percent of GDP, as shown in the bimonthly spending and revenue report disclosed yesterday. 

The primary target for this year is zero deficit, with a tolerance margin of ±0.25 percent of GDP. Meaning that if the deficit reaches BRL 28.8 billion at the end of 2024, the commitment made in the budgetary law will have been fulfilled. 

Markets, however, are much less optimistic than Fernando Haddad and Simone Tebet, the finance and planning ministers. As economic activity is poised to decelerate and one-off revenue events boosting the government revenue in these first months are unlikely to be repeated, economists predict a much higher primary deficit of at least 0.6 percent of GDP.

Data from the Federal Revenue Service showed on Tuesday a record revenue of BRL 892.23 billion from January to April, up 8.33 percent from a year earlier. The result was mainly driven by atypical events — such as tax revenues from new levies on investment funds used by the super-rich — and the resumption of PIS/Cofins, a federal tax, on fuels. 

In the report, the economic team estimates an increase of BRL 16 billion in revenue for 2024, up to BRL 2.1 trillion. This increase considers more revenue coming from dividends and participations (BRL 14.3 billion), the social security collection regime (BRL 9.7 billion) and the...