The Brazilian economy is rebounding from the pandemic downturn faster than expected, which has had a positive impact on public accounts.
According to data from the Treasury Department and the Central Bank, the entire public sector (including the federal government, regional administrations, and state-owned firms) registered a deficit of BRL 65.6 billion (USD 12.7 billion) in June 2021 alone. Over the past 12 months, the deficit reached BRL 383.2 billion.
Despite still being at enormous levels, the numbers are much lower than one year ago. In June 2020, the public sector registered a BRL 188.7 billion deficit. The central government’s net revenue has improved 57 percent on a year-on-year basis.
The Treasury Department celebrated the fact that spending outside of pandemic-related policies has been tamed — for which analysts credit the controversial federal spending cap. In force since 2017, the measure limits the increase of federal spending from year to year to match inflation. Many see it as a deterrent to development, as it prevents more sizable investment.
The improvement, however, is lower than expected. The central government alone registered a BRL 75.1 billion deficit — but economists polled by Reuters expected “just” BRL 63.4 billion.
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