UPDATE 1-Brazil recorded a budget deficit in June as a coronavirus slammed the economy | Instant News


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By Jamie McGeever

BRAZIL, July 30 (Reuters) – The Brazilian government recorded a record budget deficit of 194.7 billion reais ($ 37.6 billion) in June, the Treasury said on Thursday, substantially more than economists had expected, because the corona virus continued reduce tax revenues and trigger spending emergencies.

The main deficit excluding interest payments is more than 160 billion reais of the deficit predicted by economists in a Reuters poll, and taking the deficit does not include interest payments in the first half of this year to 417.2 billion reais.

That compared with the 29.3 billion reais deficit that had accumulated in the first half of last year, the Treasury said.

“It is important to note that the record deficit (in June) stemmed from emergency measures and the effects of the COVID-19 crisis,” Treasury said in the presentation.

Total net income in June for the central government, which consists of the Ministry of Finance, central bank and social security system, was 65.1 billion reais, down 31% in real terms from the same month last year.

Spending reached 259.9 billion reais, up 144% from this year.

The primary deficit accumulated in the 12 months to June was 483.9 billion reais, equivalent to 6.7% of gross domestic product, Treasury said.

The Ministry of Finance reiterates its view that the government’s ‘spending limit’ rule, which limits the growth of non-mandatory public spending at the inflation rate, should not be mocked, because recent media reports have suggested officials consider.

“This is a fundamental instrument for controlling increased spending and ensuring the sustainability of public accounts,” Treasury said.

The current government estimate for this calendar year is a major deficit of 787.4 billion reais, nearly 11.0% of GDP.

Waldery Rodrigues, the ministry’s special secretary, said last week that this would likely be reduced in a new official estimate to be published on Friday.

$ 1 = 5.18 reais Reporting by Jamie McGeever Editing by Chris Reese and Paul Simao

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