Central government deficit is higher than expected in June, at BRL 73.5 billion

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The central government, composed of National treasure, Central Bank and Social Security, registered a primary deficit of 73.553 billion reais in June, the Treasury reported on Thursday, a breach greater than expected by analysts.

In the same month of last year, the accounts were in deficit of 194.853 billion reais.

Economists had expected a deficit of 63.4 billion reais for June this year, according to a Reuters poll.

Central government revenues net of transfers increased 57% in June in real terms compared to the same month in 2020, while expenditures fell by 34.6%.

On the revenue side, the Treasury highlighted the impact of an extraordinary collection of 4 billion reais of IRPJ/CSLL, levied on company profits, a lower tax deferral compared to 2020 and an increase in sales and services. As for expenditures, the Treasury drew attention to the fact that primary expenditures not related to Covid-19 are maintaining a downward trajectory in the accumulated in 12 months.

“The behavior of ex-Covid primary spending shows the importance of the fiscal rules in place to prevent temporary expenses to fight the pandemic from becoming permanent expenses,” the Treasury said in a statement.

In June, the National Treasury registered a primary deficit of 18.190 billion reais, while the Social Security had a negative balance of 55.141 billion reais and the BC, a deficit of 221 million reais.

With the balance in June, the central government started to accumulate a primary deficit in the year, of 53.7 billion reais. In the first half of 2020, the fiscal balance was negative by 417.3 billion reais, with the impact of measures taken by the government to face the pandemic crisis.