06/26/2024 – 16:46
BRASILIA (Reuters) – An increase in expenses led the central government to record a primary deficit of 60.983 billion reais in May, compared to a negative balance of 45.014 billion reais in the same month last year, the National Treasury reported on Wednesday, considering that a change in the pension payment schedule distorted the basis of comparison.
The result, which comprises the Treasury, Central Bank and Social Security accounts, came last month worse than the negative balance of 54.2 billion reais projected by analysts in a Reuters survey.
The May balance is the result of a 14% increase above inflation in total expenditure compared to the same month in 2023, reaching 225.5 billion reais, while net revenue — which excludes transfers to regional governments — had real growth of 9%, to 164.5 billion reais.
According to the Treasury, the balance was the second worst for the months of May in the historical series started in 1997, second only to the result of May 2020, when it was negative by 165.1 billion reais amid the fight against the coronavirus pandemic. Covid-19.
On the revenue side, according to the Treasury, there was a real increase of 14.3% in the collection of taxes administered by the Federal Revenue in May, an increase of 15.8 billion reais compared to the same month in 2023, driven mainly by collection of Income Tax and Pis/Cofins.
In relation to expenses, the department attributed the biggest impact on last month’s performance to the increase in disbursements of social security benefits, an increase of 24.4 billion reais, equivalent to 28.5%, with the effect of changing the payment calendar of the 13th salary of retirees.
The ministry also reported that the month’s numbers were impacted by the release of approximately 6 billion reais in credits for Rio Grande do Sul, which will not reach the primary result target at the end of the year.
With the monthly data, the accumulated result in the first five months of the year was negative at 29.998 billion reais, compared to a positive balance of 1.834 billion reais observed in the same period in 2023.
In 12 months, the central government accumulated a deficit of 268.4 billion reais, adjusted for inflation, equivalent to 2.36% of GDP. The number is raised by the extraordinary discharge of court orders at the end of 2023.
The negative balance in the accounts can make it difficult for the government to work towards improving the fiscal trajectory. The target for this year’s primary result was maintained by the economic team at zero deficit, while bolder targets for the coming years ended up being relaxed due to the difficulty of advancing the entire fiscal agenda in Congress.
In its most recent review of projections for the year, made in May, the economic team estimated that it will close 2024 with a primary deficit of 14.5 billion reais, a worsening in relation to the negative balance of 9.3 billion reais projected in March, but still within the tolerance margin established by the fiscal framework.
In a press interview, Treasury Secretary Rogério Ceron said that the target of zero primary deficit this year is maintained, adding that he “strongly” believes that it is viable.
Amid pressure for the government to review public spending, he stated that the economic team is debating with President Luiz Inácio Lula da Silva a diagnosis on the evolution of spending and what measures can be taken if necessary, but considered that there would be no point in possible initiatives.
(By Bernardo Caram)
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