Brazil’s Primary Surplus Grows to 6.22% of GDP

Brazil's 100 reais bill The primary surplus, the economy that the Brazilian government makes to pay the interest on Brazil's debt, has reached the highest result for the month of February since the beginning of the historic series in 1991. This information was supplied by the head of the Economic Department at the Central Bank, Altamir Lopes.

In February, the surplus was 8.966 billion Brazilian reais (US$ 5.1 billion). In the first two months of the year (27.629 billion reais – US$ 15.8 billion) and in the accumulated result for 12 months (109,099 billion reais – US$ 62.9 billion) the results were also the best since the beginning of the historic series.

In the accumulated result for the year, the primary surplus represents 6.22% of the Gross Domestic Product (GDP), the total of all that is produced in Brazil. In 12 months, the percentage represented 4.18%. The government target is to end the year with a primary surplus of 3.8% of the GDP.

"We have growing revenues and expenses have not grown as much. It is also important to note that the budget had not been approved yet, although that is not the most important fact, despite having contributed," explained Lopes. The budget was finally approved on the 12th of this month. As it had not been approved before, it barred government expenses.

Lopes pointed out the economy made by regional governments (state and municipal), which reached 3.660 billion reais (US$ 2.1 billion), with greater contribution from the state governments (3.246 billion reais) than of city governments (414 million reais).

The reason for this increase was the greater revenues early this year, mainly due to value added state tax (ICMS). The results of the regional and state governments are the best for months of February.

Even with the results of the primary surplus, public sector expenses greater than revenues generated a nominal deficit (revenues minus expenses, including expenses with interest) of 6.477 billion reais (US$ 3.7 billion) in February, 946 million reais (US$ 542 million) in the first two months and 54.072 billion reais (US$ 31 billion) in 12 months.

"Occasionally you have sufficient primary surplus to pay interest rates. It is natural to have a nominal result, meaning what is left of the primary result after the payment of interest. This nominal result has been negative. In fact, this year the estimate is that we should close the year with a deficit of 1.6% [of GDP]." Initially the forecast had been 1.2% of GDP.

This change is due to the Brazilian Central Bank modification in estimated GDP growth, which has grown from 4.5% to 4.8%, and of market expectations for exchange rates, which rose from 1.75 Brazilian reais to the dollar to 1.80 reais, and to the modification in the benchmark interest rate estimates, up from 11.3% to 11.6% a year.

According to the Central Bank, the Brazilian public debt reached 1.157 trillion reais (US$ 663 billion) in February, which represents 42.2% of GDP. "It has grown fundamentally due to exchange rates. We had exchange rate appreciation of 4.38% and this evidently has a significant impact on the debt and GDP."

The Central Bank projection for relations between the debt and the GDP last year dropped from 41.5% to 41.3%.

The Brazilian public debt is the total of federal government, state and municipal government debts. The greater the relation between debt and GDP, the greater is Brazilian and foreign investor trust in the country's ability to pay its debts.

ABr

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Chacrinha and Sílvio Santos: Two Key Names to Understand Brazilians’ Psyche

A huge percentage of the Brazilian population spends Sundays in front of the TV ...

For the Right of Getting High in Brazil

Should drug consumption be made legal in Brazil? Many Brazilian leaders, including judges, are ...

Mercosur Exports Record US$ 135 Bi. Brazil’s Share Is 71%

Mercosur (Brazil, Argentina, Paraguay, and Uruguay) exports reached US$ 135,6 billion in 2004, a ...

Suicide Rate Among Guarani Indians in Brazil Is 34 Times National Average

New suicide figures afflicting the Guarani tribe in Brazil, have just been released. They ...

Ethanol and gasoline station in Brazil

Brazil’s Ethanol to Quench 10% of World’s Thirst for Gasoline

Brazil, India, China, the United States and the European Union have created a forum ...

Brazil Market Falls 60% from Peak Performance in May

For the first time in three years, this Monday, October 27, Brazil's stock exchange, ...

Brazil May Become Soon Main Producer of Wheat in Latin America

Brazil is catching up with Argentina as Latinamerica's main producer of wheat. This with ...

US Ultimatum to Brazil: Get Rid of Piracy or Else

The United States gave Brazil a deadline: the country has 6 months to combat ...

Brazilian Finance Minister’s Career Ends in Farce. Mantega Is the New Man.

After months of charges and denials of misconduct, the main architect of Brazilian President ...

Rio Number 1 Destination for Foreigners in Southern Hemisphere

A survey issued by consultancy firm Euromonitor International shows that Rio de Janeiro, host ...