- Deficit before interest payments was 19.6 billion reais
- Forecasts ranged from gap of 11.8 billion reais to 24 billion
Brazil reported the biggest primary budget deficit of the year last month, as the deepening recession erodes tax revenue and dissent in Congress thwarts government efforts to cut spending.
The budget gap before interest payments, which includes states, cities and government-run companies, was 19.6 billion reais ($5.1 billion) in November, compared to the median forecast of 14 analysts surveyed by Bloomberg for a 19.8 billion-real deficit. Investors and credit rating companies use Brazil’s so-called primary budget result to gauge the country’s fiscal health.
Congress in December passed legislation that relaxes the government’s primary budget target for this year, allowing it to post a deficit rather than a surplus. Analysts surveyed by the central bank don’t expect the government to close the budget gap until 2017.
The fiscal deterioration puts Latin America’s largest country at risk of another credit downgrade and threatens to exacerbate the selloff of Brazilian assets such as the real, the worst performing emerging-market currency this year after the Argentine peso. The real was little changed in mid-morning trading at 3.8598 per dollar.
The 12-month primary budget gap as a percentage of gross domestic product expanded to 0.89 percent in November from 0.7 percent a month earlier. The nominal budget deficit widened to 43.1 billion reais from 29.4 billion reais a month earlier.