UPDATE 1-Brazil posts $16 bln budget deficit in July, less than expected

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By Jamie McGeever

BRASILIA, Aug 28 (Reuters) – Brazil’s government posted a primary budget deficit of 87.8 billion reais ($16.2 billion) in July, the Treasury said on Friday, as the coronavirus crisis continued to depress tax revenues and fuel spending even as the economy recovers.

The deficit excluding interest payments was less than the 96.8 billion reais deficit economists in a Reuters poll had predicted, and took the shortfall excluding interest payments in the first seven months of the year to 505.2 billion reais.

The July figure compares with a deficit of 35.2 billion reais accumulated in the same period last year, Treasury said.

Some 62.8 billion reais was spent on crisis-fighting measures in July, Treasury said, including 45.9 billion on emergency transfers to millions of Brazil’s poorest people. Taxes were also deferred.

“Due to such a large fiscal effort, together with structural fiscal problems in the country, it is essential to resume the consolidation (fiscal) process,” it said in a statement. “The resumption of the fiscal consolidation process is fundamental to maintain favorable economic conditions for long-term growth.”

Total net revenues in July for the central government, comprising the Treasury, central bank and social security system, were 90.3 billion reais, down 22.8% in real terms from the same month last year.

Expenditure totaled 178.1 billion reais, up 44.9% on the year in real terms.

Brazil’s government is on course to post a record-busting primary deficit this year of almost 800 billion reais ($147 billion), or around 11% of GDP, according to its own forecasts. That will swell the national debt to around 95% of GDP, also a record and an exceptional level for an emerging economy. ($1 = 5.41 reais) (Reporting by Jamie McGeever Editing by Chris Reese and Leslie Adler)

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