Fiscal forecasting performance in an emerging economy: An empirical assessment of Brazil

•This study analyzes fiscal forecast errors in the Brazilian economy.•Economic, political, and institutional and governance dimensions are explored.•The data forecasts present low quality and efficiency.•The budget forecast error is subject to bias in growth forecasts and cyclical fluctuation.•Electoral cycles represent a source of overestimated forecasts.

This study makes use of Brazilian data to analyze government budget balance forecast errors. Besides the analysis of the quality and efficiency of budget balance forecasts, economic, political, and institutional and governance dimensions are explored. The findings show that the data forecasts have low quality and efficiency. Furthermore, it is observed that the budget forecast error is subject to a backward-looking effect, a bias in the economic growth forecasts, as well as cyclical fluctuations. Finally, electoral cycles represent a source of overestimated forecasts, and strong institutions and governance supported by the public are able to suppress opportunistic motivations in budget forecasts.