Economists consulted by the Ministry of Finance improved their forecasts for the government’s headline results this year, but worsened the projection for 2025, also seeing higher gross government debt in both periods, the report showed on Thursday Prisma Fiscal November.
According to the report, the median expectation is now for a negative primary balance of 62,000 billion reais in 2024, compared to a previous forecast of a deficit of 63,832 billion reais. For 2025, expectations for the headline result worsened and led to a deficit of 89.574 billion reais, compared to 88.380 billion reais last month.
As for general government gross debt, economists now expect it to reach 78.40% of gross domestic product (GDP) by the end of 2024, above the 78.27% forecast in October. In 2025, the forecast is that the debt will reach 81.73% of GDP, compared to the previous projection of 81.20%.
The data comes amid persistent market concerns about the government’s ability to improve the trajectory of public finances, with doubts about the sustainability of the fiscal framework, while rising interest rates increase the cost of public debt.
The government had promised to announce spending containment measures after the second round of the municipal elections. The delay in the release of the package has generated nervousness among investors.
Finance Minister Fernando Haddad indicated Wednesday that there may not be enough time for the announcement to take place this week, but stressed that the fiscal impact of the proposal will be “significant.”
The government’s objective is to bring the primary deficit to zero by the end of this year, aiming to also eliminate the 2025 accounts.
On the revenue side, the median expectation increased for this year and next. The new projection indicates an inflow of 2.648 trillion reais in 2024, versus 2.645 trillion reais estimated in the previous month. In 2025, federal revenue is expected to be 2.800 trillion reais, up from 2.799 trillion reais forecast in October.
Economists consulted in the Prisma case also increased their projection of total central government spending this year to 2.212 trillion reais, from 2.210 trillion reais previously, and for 2025 to 2.380 trillion reais, from 2.369 trillion reais in October .
Source: Terra
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