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Brazil’s Public Accounts Worsen in November as Slump Drags on

Brazil’s Public Accounts Worsen in November as Slump Drags on

  • Central bank’s primary budget deficit reaches 38.4 bln reais
  • Result was the worst on record for the month of November

Brazil’s public accounts deteriorated in November as the country’s worst recession in a century drags on, according to a partial snapshot of government finances published by the national treasury on Monday. 

The central government’s primary budget deficit, which excludes interest payments and the finances of states and municipalities, hit 38.4 billion reais in November - its worst-ever result for the month. That compares with a one-off surplus of 40.8 billion reais in October and a median forecast of a 41 billion reais deficit from analysts surveyed by Bloomberg.

President Michel Temer notched up his biggest congressional victory to date in December following the passage of a constitutional amendment to cap increases in public spending to the previous year’s rate of inflation. That was the first in a series of measures designed to tackle the record budget gap and to put public indebtedness back on a sustainable track.

For next year, Temer has proposed a reform of Brazil’s pension system. He also plans to grapple with labor regulation in an attempt to boost formal job creation and stimulate economic growth.

Brazil’s gross domestic product has contracted more than 7 percent over the last two years. Economists surveyed by the central bank have been repeatedly dialing down their estimates for next year’s growth over recent weeks.