A final splurge

THAT governments splurge in election years is a hallowed democratic tradition. True to form, Brazil’s left-wing administration, led by President Dilma Rousseff who is seeking a second term in an election on October 5th, has gone on a spending spree. Just how big became apparent on September 30th, when the treasury released its August accounts.

The primary deficit (before interest payments) reached 14.4 billion reais ($5.9 billion) in that month, the fourth in a row in which the government has failed to put aside cash to pay creditors. The consolidated primary surplus in the eight months to August stood at just 0.3% of GDP. Most of that came from the states; the central government managed just 1.5 billion reais, a piffling 0.05% of GDP and the worst result for the period since 1998. The overall budget deficit climbed to 4% of output, the highest level since Ms Rousseff’s predecessor and mentor, Luiz Inácio Lula da Silva, embarked on a huge stimulus package in 2009, as the global financial crisis took hold.



Part of the fiscal deterioration is a good sign, after a fashion. The government has at last decided to stop...Continue reading



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