Prisma: Market sees smaller primary deficit in 2024 – 03/14/2024 – Market

Economists began to predict a smaller primary deficit this year, but worsened their view of a deficit in 2025, the March Prisma Fiscal report, compiled by the Ministry of Finance, showed this Thursday.

Now, the median expectation is for a negative primary balance of 82.818 billion reais in 2024, against the previous view of a deficit of 83.974 billion, according to the report. However, for the following year, the result is now expected to be negative at 86.541 billion reais, much worse than the previous projection of a loss of 79.740 billion.

For 2024, net revenue (discounting transfers to states and municipalities) of 2.099 trillion reais was forecast, above the 2.093 trillion in the last Prisma. For 2025, however, the expectation fell to 2.212 trillion reais, from 2.222 trillion previously.

With regard to the collection of federal revenue — considered crucial by the markets for the government to be able to achieve the goals set out in the new fiscal framework — the median view on Prisma now calculates 2.565 trillion reais this year, above the 2.545 trillion predicted in the previous bulletin.

For 2025, revenue expectations also rose, to 2.706 trillion reais, from 2.694 trillion previously.

There was an increase in the federal government’s median expected expenditure this year, to 2.180 trillion reais, against 2.178 trillion previously. For the following period, the projection fell to 2.304 trillion, compared to 2.306 trillion in the previous reading.

Meanwhile, the market reduced the projection for general government gross debt to 77.50% of GDP this year, against 77.67% expected in the previous month. For 2025, the prognosis has been marginally reduced to 80.09% from 80.10%.

The revisions to the Prisma report come at a time of distrust about the government’s ability to achieve its objective of bringing the primary deficit to zero this year. Initiatives by the Ministry of Finance in this regard, such as the attempt to re-encumber the payroll of 17 sectors of the economy and reformulate the Perse program, have encountered political resistance.