Brazil Posts Largest Budget Deficit Ever As Rousseff Cries "Coup," Olympic Ad Sales Top $1 Billion
By Tyler Durden
On Tuesday, embattled Brazilian President Dilma Rousseff was dealt a bitter blow when PMDB – the party of VP Michel Temer and House Speaker Eduardo Cunha –
A deep, permanent, structural fiscal adjustment remains front-and-center on the policy agenda to restore both domestic and external balance. In our assessment, at the end of the fiscal consolidation process Brazil needs to end up with a primary surplus of 3.0% to 3.5% of GDP. This would be the level of primary surplus that would put gross public debt on a clear declining trajectory, something that is required forBrazil to rebuild fiscal buffers and regain room to use fiscal policy counter-cyclically, whenever needed and appropriate.
Ultimately, a weaker BRL and a deep structural fiscal adjustment are key pillars to restore domestic (i.e., lower inflation) and external balance (i.e., to promote and consolidate the adjustment of the current account). However, given the very modest scope and slow pace of fiscal consolidation, and its far-from-ideal quality, the burden of current account adjustment will likely continue to fall disproportionately on monetary policy and the BRL.
Now obviously, there’s a long, long way to go for Brazil to get back to primary surplus at all, let alone push the black ink up to 3% of GDP. The idea that this is going to turn around the second Rousseff leaves the Presidential palace is laughable at best. And speaking of laughable, have a look at this rather amusing bit from Citi:
- Rousseff impeachment won’t sustain Brazil rally
- As the likelihood of President Dilma Rousseff’s impeachment increases “investors will take a step back.
- “It might be the case of buying the rumor and selling the fact.”
In other words: investors might suddenly wake up to the fact that an intractable political crisis is most assuredly not risk positive.
Meanwhile, Rousseff is back on the tape likening the impeachment proceedings to a coup. “Presidents must be chosen in free elections,” she proclaimed on Wednesday. Countdown to impeachment: around 45 days.
Finally, it’s worth noting that according to the latest figures, NBC has sold $1 billion in national ads for the Summer Olympics in Rio. “We’ve surpassed the $1 billion mark four months ahead of (the 2012 Summer Games in) London,” Seth Winter, NBC Sports’ executive vice president of advertising sales, said in a statement.
$1 billion. That’s a lot of refunds, Seth.
Source: Brazil Posts Largest Budget Deficit Ever As Rousseff Cries "Coup," Olympic Ad Sales Top $1 Billion
