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Brazil govt projects surge in 2024 net revenue to highest mark in 14 years

Brazil govt projects surge in 2024 net revenue to highest mark in 14 years
© Reuters. FILE PHOTO: Consumers shop at a weekly street market in Rio de Janeiro, Brazil, September 2, 2021. REUTERS/Ricardo Moraes/File Photo

BRASILIA (Reuters) – Brazil’s Finance Ministry projected a surge in net current revenue this year, reaching the highest level relative to Gross Domestic Product (GDP) in 14 years, as part of efforts to achieve an ambitious goal of eliminating the primary deficit.

The ministry indicated in a technical note that the central government’s net revenue is anticipated to rise to 19.2% of GDP, up from 17.5% in 2023, asserting that this level aligns with budgetary balance.

If realized, this would mark the highest level since the 20.2% of GDP recorded in 2010. President Luiz Inacio Lula da Silva’s government aims to erase its primary budget deficit, which, according to the Treasury, was 2.1% last year.

However, this goal is met with heavy skepticism from the market, which projects a primary deficit equivalent to 0.8% of GDP for this year, given its broad reliance on revenue growth.

The ministry said in a technical note it expects a net revenue expansion in light of the “correction of distortions” and the “promotion of tax justice” through measures proposed by the government and approved by Congress last year.

The note also reaffirmed the ministry’s GDP growth projection of 3% in 2023 and 2.2% for 2024, labeling the latest as “conservative,” based on a slight deceleration in consumption and the external sector, along with a recovery in investment.

“Considering the set of information already available, it is possible that, similar to 2023, initial market estimates for GDP expansion in 2024 may need to be revisited,” said the ministry.

In a weekly survey conducted by the central bank, private economists now estimate a GDP increase of 2.9% in 2023 and 1.6% in 2024.

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