Brasília – Brazil’s so-called consolidated public sector – federal government, state governments, municipalities and state-owned companies – posted a R$ 14.46 billion (US$ 5.93 billion) primary deficit in August, according to results released this Tuesday (30th) by the Brazilian Central Bank. It was the fourth straight monthly deficit and the worst result for August since records started being kept in December 2001.
In August 2013, a R$ 432 million (US$ 177.2 million) primary deficit was recorded. The first eight months of 2014 had a R$ 10.205 billion (US$ 4.186 billion) primary surplus, as against a R$ 54.013 billion (US$ 22.157 billion) surplus in the comparable period in 2013.
In the 12-month period ended August, primary public sector surplus was R$ 47.498 billion (US$ 19.484 billion), tantamount to 0.94% of Brazil’s Gross Domestic Product (GDP). The primary surplus consists of savings accrued to pay interest on the public debt. This year, the primary public sector surplus target is 1.9% of GDP.
Debt interest payments amounted to R$ 17.016 billion (US$ 4.108 billion) in August and R$ 165.259 billion (US$ 67.792 billion) in the first eight months of the year. As a result, the nominal deficit, which includes primary surplus and interest payments, amounted to R$ 31.476 billion (US$ 12.912 billion) last month and R$ 155.054 billion (US$ 63.606 billion) in the first eight months of the year.
This Tuesday, the National Treasury Secretariat has also released the Central Government’s primary deficit results. The Central Bank’s figures differ from the Treasury’s calculations. In addition to considering the fiscal performances of states, municipalities and state-owned companies, the Central Bank employs a different method to calculating primary surpluses/deficits. Whereas the Treasury computes revenues and actual Budget spending, the Central Bank bases its calculations on government indebtedness variations.
As per the Treasury’s results, the Central Government (Treasury, Central Bank and Social Security) posted a R$ 10.4 billion (US$ 4.2 billion) primary deficit, the worst result since 1997. However, Brazil’s Treasury secretary Arno Augustin rules out the possibility of revising the R$ 80,8 billion (US$ 33.1 billion) primary surplus target for the year.
The Central Government’s fiscal target for the second four-month period of 2014 was R$ 39 billion (US$ 15.9 billion), but the actual result fell far short: R$ 3.1 billion (US$ 1.2 billion), or 7.8% of the target.
To Augustin, targets aside, the most important thing is the government has managed to lower the public debt-to-GDP ratio. “We are one of a handful of countries that have succeeded, despite the economic issues the world is experiencing at this time. This ratio has gone up in many countries. I think this bears repeating. Despite the difficulties this year, Brazil’s debt keeps going down,” he said.
*Translated by Gabriel Pomerancblum
