Fiscal deficit increases in Brazil, Mexico, Chile and Colombia
During the first half of 2024, the fiscal deficit of Brazil, Mexico, Chile and Colombia has increased according to the report from the risk rating agency Fitch Ratings, which highlights the improvements in the public sector accounts of Argentina, Ecuador, Guatemala, Nicaragua and Paraguay
The risk rating agency Fitch Ratings issued its report on the fiscal deficit in Latin America for the first half of 2024, where an increase is seen in Brazil, Mexico, Chile and Colombia. On the other hand, it highlights the improvements in the public sector accounts of Argentina, Ecuador, Guatemala, Nicaragua and Paraguay.
Two realities in terms of regional economy that show the deterioration of fiscal accounts in the first block of four countries, in opposition to more effective positions such as those implemented by the government of Javier Milei in Argentina, followed by other positive measures in Ecuador, Guatemala, Nicaragua and Paraguay.
According to the Fitch Ratings report: “Fiscal deficits mostly widened as post-pandemic revenues began to decline, primary spending fell in line with past inflation, and high financing costs raised interest bills. . In 2024, the deterioration has continued, as spending has exceeded income, with some exceptions.”
By comparing the fiscal result “of the last years of each country with the fiscal result of the last 12 months as of June 2024 (with the exception of Bolivia and Colombia, whose latest data is as of April), the risk rating agency establishes that Argentina closed the last year with a fiscal deficit of -4.4 % of GDP. As of June 2024, its fiscal deficit corresponding to the last twelve months was -0.6 %. Its fiscal goal for 2024 is full balance (0 %).”
In the case of Brazil, the nation closed 2023 with a fiscal deficit of -7.5 % of GDP; accumulated -7.8 % fiscal deficit in the last 12 months to June 2024 and its goal for 2024 is -5.2 %.
Chile, another country where the fiscal deficit increased, ended 2023 at 2.4 %. By June 2024, the deficit reached -3.6 % and its fiscal goal is -1.9 %.
Colombia, on the other hand, “closed 2023 with a fiscal deficit of -4.3 %. Taking April 2024, in the last 12 months it accumulated a -6.2 % deficit. The goal for the end of 2024 is -5.6 %.”
Ecuador closed 2023 with a fiscal deficit of -5.3 %. In the last 12 months to June it reached -3.9 % and its fiscal goal for the current year is -3.5 %.
Mexico, another country where the fiscal deficit increased despite being the second most important economy in Latin America, closed 2023 at -3.3 % and in the last 12 months to June 2024 it rose to -4.1 %. The Mexican Government plans to close 2024 at -4.9 %.
Guatemala, a Central American country among those that have improved by improving its performance, closed 2023 with a deficit of -1.3 %, “while as of June 2024 it accumulated, in the last 12 months, a deficit of -0.5 %. The goal for 2024 is -2.4 %.”
Nicaragua, which is also among the best performing nations, closed 2023 “with a surplus of 2.7 %. The index rose by 2.9 % if the last 12 months to June 2024 are taken. The goal for 2024 is a surplus of 0.9 %.”
In the case of Paraguay, the fifth economy mentioned in the Fitch Report that has also improved public spending closed 2023 with a deficit of -4.1 %; in the last 12 months to June 2024 it was -3.1 % and has a fiscal goal to end 2024 of -2.6 %.
M.Pino
Source: finanzasdigital
(Reference image source: Jason Briscoe in Unsplash)
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