Key facts
- Brazil's central government posted a primary deficit of 40.6 billion reais ($7.4 billion) in May.
- This deficit was 36.2% lower than the deficit recorded in May of the previous year.
- The monthly shortfall was in line with economists' forecasts.
- The 12-month deficit through May reached 142.3 billion reais, or 1.06% of GDP.
- Government spending rose 9.4% while revenue increased 5.5%, driven by higher pension outlays.
- The central government has a surplus of 32.198 billion reais for the year to date.
Brazil's central government recorded a primary deficit of 40.6 billion reais ($7.4 billion) in May, a figure that was 36.2% lower than the deficit recorded in the same month last year. This result exceeded market expectations, which had predicted a larger shortfall of 62.2 billion reais according to the Prisma Fiscal survey.
The monthly deficit reached 53.257 billion reais, broadly in line with the 53 billion reais deficit forecast by economists in a Reuters poll. In the 12 months through May, the deficit totaled 142.3 billion reais, equivalent to 1.06% of gross domestic product, against a government target for a 0.25% primary surplus this year.
The Treasury stated that the result reflected a real 9.4% increase in total spending, which outpaced a 5.5% rise in net revenue. Strong tax revenue, with record monthly collections this year, supported the revenue side. The government indicated that higher outlays on pensions were the main driver of spending growth.
Despite the negative result for May, public accounts remain positive for the year to date. In the first five months of this year, the Central Government recorded a primary surplus of 32.198 billion reais, the best result for the period since 2022. In the same period last year, there was a deficit of 28.652 billion reais.