Deficit in public accounts may exceed $67.8 bi this year

Brazil’s National Treasury Secretariat Mansueto Almeida reported today (Mar. 30) that the deficit in public accounts may exceed $67.8 billion this year. In an interview to unveil his fiscal result for February, Mansueto said this year “is going to be rather atypical” due to the measures to cope with COVID-19.

“There will be massive pressure on expenditures and tax collection in the months of April, May, and June,” he said during the interview, broadcast online.

Mansueto listed government programs devised to tackle the crisis, including the impact on public accounts, in the form of extra unemployment benefits, credit for small and medium businesses, $120 allowances for informal workers, etc.

Higher spending

The secretary noted that there should not be any permanent increase in spending after the crisis is over. “We must have control so that temporary expenditures do not become permanent. If this happens, we would be jeopardizing all fiscal adjustments made so far. That’s why it is important to have all actions with economic and social effects to be limited to 2020,” he said.

Mansueto said that the economy activity was seeing a recovery before the crisis hit Brazil, and that the government was making adjustments to the economy. “It’s good that we’re facing such difficult circumstances after we approved the pension reform, after having made a number of structural adjustments to the economy, also with a scenario with low inflation and very low interest.”

He went on to point that Brazil faces a structural problem as it has spent virtually everything it collects since 2015 mandatory expenditures. “That’s why it’s so important to focus on a structural adjustment, curbing the increase in mandatory expenditures. The first major step was taken with the approval of the pension reform, but there’s a lot more to be done,” he said.

Primary deficit

In February, the government’s primary deficit stood at $5 billion. According to Mansueto, the result was impacted by the increase in the transfers by the Federal Government to states and municipalities. “There was an increase in the transfers to states and municipalities due to the increase in tax collection in January,” he stated. These transfers added to $6.4 billion, with a real increase of 9.6 percent.