By Joe Leahy
Brazil revealed its worst monthly fiscal deficit since records began on Friday, underscoring the challenges facing incumbent president Dilma Rousseff after she was re-elected on Sunday for a second term.
Brazil’s real weakened 2.14 per cent to R$2.45 against the dollar on news the overall public sector deficit in September was R$69.4bn, the worst monthly reading since the data series began in December 2001. The country also recorded its first primary budget deficit – the balance before interest payments – for the first nine months of the year, at 0.4 per cent of gross domestic product.
“These numbers suggest that, without a very strong adjustment, Brazil risks losing its investment grade status,” said Tony Volpon, economist with Nomura, in a research note titled “Fiscal Meltdown”.