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LatinNews Daily - 30 September 2020

In brief: Brazil’s widening fiscal deficit does little to reassure markets

* Brazil’s economy ministry has revealed the latest figures for the government’s fiscal deficit, according to which the central government recorded a primary deficit of R$96.1bn (US$17bn) in August, up from a deficit of R$16.8bn in August 2019, and the worst result on record for that month. In the 12 months to August, the primary deficit has widened to R$647.8bn, equivalent to 8.96% of GDP, with the government expecting to close the year with a primary deficit equivalent to 12% of GDP. The national treasury secretary, Bruno Funchal, announced these figures yesterday (29 September), in a press conference in which he also said that the government has heard the “very clear [negative] signals” from investors over a proposed new social programme, Renda Cidadã, notably regarding how the government proposed to fund it, and said it would take this “warning” into account going forward. After plunging on 28 September in reaction to Renda Cidadã’s expected negative fiscal impact, the index for the São Paulo stock exchange (Ibovespa) fell a further 1.15% yesterday.

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