Brasília – This Friday (4th), the Brazilian National Treasury secretary, Arno Augustin, confirmed a R$ 12.4 billion (US$ 6 billion) withdrawal from the Sovereign Fund of Brazil (FSB, in the Portuguese acronym), to add to the National Treasury reserves and help the government meet its 2012 primary surplus target. The target is R$ 139.8 billion (US$ 68.2 billion).
“We have withdrawn some of the [FSB] funds which will go into the primary surplus. What matters is that these R$ 12.4 billion are being returned to the primary surplus. Just as it was an expense in the past, now it comes back as revenues,” he said.
Three measures adopted on December 31st, 20102 were published on the Official Gazette this week, which resulted in nearly R$ 15.8 billion entering the government’s coffers. One such measure was authorized by Decree #769, which enabled the Brazilian Development Bank (BNDES) to buy Petrobras stock retained by the Sovereign Fund using federal government bonds, an operation that raised R$ 8.847 billion (US$ 4.320 billion) for the Treasury.
Created by the government in 2008, the fund was designed to fight the effects of internal and external crises. It functions as a savings account, and can be used by the government to meet its primary surplus target.
Another financial engineering measure was taken to boost the National Treasury’s coffers. The BNDES advanced the payment of R$ 2.317 billion (US$ 1.131 billion) worth of dividends (profit paid to shareholders) to the government. Also to raise funds, the Federal Savings Bank transferred another R$ 4.69 billion (US$ 2.29 billion) worth of dividends to the Treasury. The combined total was R$ 15.8 billion (US$ 7.716 billion).
To complete the operation, R$ 12.4 billion (US$ 6 billion) were transferred from the Sovereign Fund to the National Treasury, an operation confirmed by Arno Augustin. Thus, only R$ 2.854 billion (US$ 1.393 billion) were left in the fund.
*Translated by Gabriel Pomerancblum
