Honey, I Doubled the Target

BRAZIL ECONOMICS - Report 23 Jul 2024 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

The federal government has revised its primary deficit projection for 2024 from R$ 27.5 billion (0.2% of GDP) to R$ 61.4 billion (0.5% of GDP), despite suspending R$ 15 billion in expenditures.

The deterioration of expected performance is partly due to revenue shortfalls, but mainly due to the evolution of expenses above the amounts projected two months ago. In both cases, despite the revision taking place only now, the movements were largely anticipated by public finance experts, who warned about excessive optimism on the revenue side and underestimation of significant expenses, not to mention, of course, the amount allocated to the climate disaster in Rio Grande do Sul.

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