Accounts in Brazil only record surplus in 2020, says IMF EXAME.com

With a forecast end 2016 with deficit the primary around R$ 170 billion, the public accounts brazilian will register positive results in 2020.

The projection is contained in the Monitor report the Tax, released today (5) by the International Monetary Fund (IMF). The publication includes projections for several countries are monitored by the IMF, including Brazil.

The estimate is different from that presented by the economic team. To present the project of the Budget of 2017, at the end of August, the minister of Finance, Henrique Meirelles, and the interim minister of Planning, Dyogo Oliveira, informed that the Central Government (National Treasury, Social security and Central Bank) will return the record primary surplus in 2019, if approved the proposed amendment to the Constitution (PEC) that limits the growth of public spending.

The primary outcome indicates the performance of the accounts of the public sector (Union, states, municipalities, and state) without regard to the payment of the interest on the public debt.

according To the report, the country will end 2016 with a deficit of primary 2.8% of Gross Domestic Product (GDP, the sum of the wealth produced in the country). The deficit will fall to 2.2% of GDP in 2017, 1.2% in 2018 and 0.5% in 2019. Only in 2020, the Monetary Fund projected primary surplus of 0.3% of GDP.

public Debt

Since 2014, Brazil accumulates deficits primary. The sequence of negative results will cause the gross public debt to shoot. According to the Monitor the Tax, the indicator will jump from 78,3% of GDP in 2016 to 82,4% in 2017, 85,2% in 2018, 87,9% in 2019, at 90.8% in 2020 and by 93.6% in 2021. According to the IMF, Brazil will have the largest debt among the emerging countries from 2019.

"All debts public and private in Brazil have increased since the middle of the years 2000, fueled by an explosion of credit and a fiscal policy pro-cyclical. The strong deceleration in credit growth in 2015 has exacerbated the economic recession, but the fragility of the balance of the public limits the ability of the country to cushion the impact of the deleveraging of the private sector," noted the report.

the methodology of The IMF for the calculation of the public debt differs from that used by the Central Bank (BC). To calculate the debt of the government, the IMF considers the government bonds in the portfolio of BC that are not used to regulate the amount of money in circulation in the economy.

the criterion of The IMF raises the percentage of public debt over GDP. According to the latest survey released by the BC, the gross debt of the general government was at 70.1% of GDP in August.