Brazil posts narrower-than-expected May primary deficit on strong revenue, lower spending

BRASILIA (Reuters) -Brazil's central government posted a smaller-than-expected primary deficit in May, Treasury data showed on Thursday, supported by strong revenue and a decline in expenditures.

The primary deficit totaled 40.6 billion reais ($7.4 billion) for the month, below the 41.1 billion reais shortfall forecast by economists polled by Reuters and well under the 60.4 billion reais deficit recorded in the same month last year.

According to the Treasury, net revenue rose 2.8% in real terms, boosted by higher tax collections, stronger social security contributions, and the withdrawal of 5 billion reais from some federal funds.

At the same time, total expenditures dropped 7.6% in real terms compared to May 2024, as the government maintained tighter control over spending.

Over a 12-month period, the central government reported a primary surplus of 18.1 billion reais, equivalent to 0.15% of GDP, within the official fiscal target of a zero deficit, with a tolerance band of 0.25% of GDP in either direction.

The shift to a surplus on a 12-month basis, however, was largely driven by a calendar effect, as the government postponed burdensome court-ordered debt payments to July, whereas in 2024 those payments were concentrated in the first half of the year.

($1 = 5.4966 reais)

(Reporting by Marcela Ayres; Editing by Chris Reese and Diane Craft)

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