Fitch Ratings-New York/London-01 February 2021: Brazil’s large deficit and high public debt burden underscore its continuing fiscal challenges notwithstanding last year’s somewhat better-than-expected performance, Fitch Ratings says. With general elections due in October 2022, this year is a key year to revitalize the government’s fiscal reform agenda for boosting budgetary flexibility and maintaining the credibility of the spending cap.
Data on Friday showed Brazil’s general government deficit more than doubled to 14% of GDP from about 6% in 2019. This was better than our forecast of 16.4% primarily due to under-execution of budgeted spending, which improved the central government outturn, and higher regional government surpluses. Central government revenue contracted by a nominal 10.2%, while primary spending grew 35% as Brazil implemented one of Latin America’s biggest Covid-19 support packages.
By Shelly Shetty and Mark Brown via Fitch Ratings