Brazil central govt posts smaller-than-forecast deficit in March

BRASILIA (Reuters) – Brazil’s central government reported better than expected fiscal numbers in March, once again supported by higher tax revenue, and suggested a brighter fiscal picture for 2022.

The central government recorded a primary budget deficit of 6.3 billion reais ($1.27 billion) in March, the Treasury said on Thursday, smaller than the median forecast of a 13.6 billion reais deficit in a Reuters poll.

In the first quarter, the primary surplus reached 49.6 billion reais, more than doubling the amount seen a year earlier.

In a statement, the Treasury pointed out that the results seen so far “suggest that the annual balance could be better” than what the Economy Ministry had previously calculated in its bi-monthly revenue and expenditure report from March.

The ministry forecast in the document that the primary deficit would end the year at 66.9 billion reais, significantly lower than the official deficit target of 170.5 billion reais.

But the Treasury said on Thursday that data to March had shown a nominal increase in net revenue well above what was considered in the report.

In the 12 months to March, the central government primary deficit reached 15.5 billion reais, worth 0.17% of the country’s gross domestic product.

“The good results recorded at the beginning of 2022 point to the continuity of the fiscal consolidation process, result of the good moment of revenues and control of expenses,” said the Treasury.

According to Brazil’s Treasury Secretary Paulo Valle, tax revenue has been boosted by higher commodities and companies’ and investments’ income, partly because of higher interest rates, while the central bank commands an aggressive monetary policy cycle to tame the country’s double-digit inflation.

($1 = 4.9769 reais)

(Reporting by Marcela Ayres; Editing by Chizu Nomiyama, Bernard Orr)