Worrisome Brazilian data to be released Thursday
Reuters, Wednesday, February 25, 1998 at 19:47
SAO PAULO, Feb 25 (Reuters) - The Brazilian government will
release monetary base and budget deficit figures for 1997 at
1100 local (1300 GMT) on Thursday, a central bank official
said.
The fiscal deficit report is being anxiously awaited by
financial markets after a version of the figures -- which were
leaked to the press last week -- showed them to be considerably
higher than expected.
According to the reports, the budget deficit in nominal
terms ended the year at the equivalent of 6.0 percent of gross
domestic product (GDP). The market was expecting a shortfall of
about 5.0 percent of GDP.
Analysts are most alarmed by the sharp deterioration in
December after the budget deficit was reported at 5.03 percent
for the 12-month period until November.
Brazil's nominal budget deficit, which covers local, state
and federal spending, including interest payments, fell from
7.2 percent of GDP in 1995 to 5.9 percent in 1996 and was
expected to continue falling in 1997.
Economists say improvement is essential because Brazil's
wide current account and budgetary deficits make its currency
vulnerable to a speculative attack. They say the budget gap
must continue to shrink in order to build confidence.
Analysts predicted a negative reaction from markets if
reports of a 6.0 percent nominal budget deficit were confirmed.
"The market has not fully absorbed this. We expected the
numbers to be bad, but not so bad," said Felipe de Holanda, an
economist at Citibank Brasil.
Other analysts said market reaction would depend on the
government's explanation for the budget deficit and whether
officials thought it was the beginning of a worsening trend.
"The markets have seen the headlines -- now they're going
to want to see what the government has to say," said an
economist at an international bank.
Government officials said the data's date of release,
which had originally been set for last week, had been postponed
for fear of a poor reception ahead of the long Carnival
weekend, which ended Wednesday.
adrian.dickson@reuters.com))
Copyright 1998, Reuters News Service |
