Fiscal Scenario Review
We have revised our forecast for the Central Government’s primary balance for 2024, from -R$ 77.3 billion to -R$ 58.2 billion. The current number includes R$ 36 billion in ICMS subsidies (compared to R$ 25 billion in the previous projection), R$ 3 billion from online betting, and R$ 22 billion from Carf. We also increased the expenditure estimate by R$ 6.9 billion.
Although more optimistic than the market median (-R$ 81.9 billion), we are only considering as extra sources of revenue those measures that have already been approved or have a high chance of approval. In addition, we are not incorporating the full impacts estimated by the Treasury. In other words, it’s still a more conservative scenario.
We have also incorporated the payment of the total amount of court-ordered debts in 2027 (R$ 200 billion), leading the gross debt/GDP ratio to reach 90.9% in 2032.
Our 2023 Central Government’s primary balance forecast was maintained (-R$ 101.7 billion).
Overall, we believe that the fiscal scenario will be better than expected by the market, but additional efforts are needed to achieve the primary targets in 2024 and 2025 (0% and 0.5% of GDP, respectively).
