Brazil's central government surpassed its 2024 primary budget target, as per Treasury figures released on Thursday, demonstrating resilience against more pessimistic market projections. The primary budget deficit of 43 billion reais ($7.31 billion) represented 0.36% of the gross domestic product.
Excluding 32 billion reais in expenses not factored into the target calculation due to extraordinary events like severe flooding in Rio Grande do Sul, the adjusted deficit was 0.09% of GDP.
President Luiz Inacio Lula da Silva's administration achieved a zero primary deficit target with a 0.25% margin for error. Treasury Secretary Rogerio Ceron acknowledged the positive fiscal recovery results but emphasized the need for continued determination, especially amid economic challenges and global uncertainties.
Ceron highlighted the government's vigilance in assessing the necessity of additional fiscal steps to meet this year's goals, ready to propose them if needed.
The fiscal performance was buoyed by increased tax revenues due to alterations in investment fund and offshore taxation, as well as larger dividend payments and the advancement of some 2024 expenses to 2023. However, critics question the sustainability of these results in light of the upcoming 2025 target for a balanced primary budget.
Despite a robust GDP growth potential of around 3.7% in the previous year, the government failed to achieve a surplus. A rise in mandatory expenditures, particularly in social benefits, pensions, and public salaries, remains a significant fiscal challenge for Latin America's largest economy.
After a deficit equivalent to 2.09% of GDP in 2023, the government asserts it has implemented substantial fiscal corrections.