Brazil's fiscal balance and outlook have deteriorated significantly

Until July 2015, the fiscal balance deteriorated to -BRL282bn vs -BRL124bn in the same period last year when Brazil eventually posted a full-year deficit of -6.2% of GDP. The deficit is expected to reach -7.6% of GDP in 2015 as interest payment requirements continued to rise while the primary balance contracted further thanks to the decline in revenue growth. 

Forecast for 2016 fiscal balance has also been revised down to -6.2% from -5.3% previously. While revenue growth remains under pressure due to the contracting economy, spending cuts have not materialised due to the legislative hurdles stemming from Brazil's prevailing political situation.