Reuters logo
UPDATE 2-Brazil central gov't surplus widens, goal still distant
May 28, 2015 / 7:52 PM / 2 years ago

UPDATE 2-Brazil central gov't surplus widens, goal still distant

(Adds official comments and context)

By Alonso Soto

BRASILIA, May 28 (Reuters) - The primary budget surplus of Brazil’s central government improved in April from the previous month, but the result was not enough to turn around public finances and meet an important fiscal goal this year.

The primary surplus totaled 10.085 billion reais ($3.18 billion) in April, the Treasury said on Thursday. That was up from a surplus of 1.464 billion reais in March, but well below last year’s 16.612 billion reais.

In the first four months of the year, the central government accumulated a primary surplus of 14.795 billion reais, down 54.4 percent from the surplus in the same period last year. The central government’s primary surplus goal is 55.3 billion reais for the year.

A long list of unpaid bills from last year and dwindling tax revenues have continued to weigh on public finances, despite Finance Minister Joaquim Levy’s efforts to rebalance the accounts with hefty spending cuts and tax increases.

Pulling the fiscal balance out of the red and meeting a consolidated primary surplus goal of 66.3 billion reais, or 1.1 percent of gross domestic product, is crucial for President Dilma Rousseff to regain the confidence of investors after years of heavy public spending.

“This result signals a change in trend despite the weak economic conditions,” Treasury chief Marcelo Saintive told reporters.

The central government account covers federal ministries, the central bank and social security.

Levy claimed important victories this week in his battle to plug that widening fiscal gap after Congress approved austerity measures to limit unemployment and pension benefits.

Still, most analysts agree he will need to do more to meet the fiscal target.

“Levy will face an uncomfortable choice between further tax hikes later in the year - or missing his targets for fiscal consolidation,” analysts with Capital Economics said in a note prior to the results.

More spending cuts and tax hikes risk dragging down an economy already heading to its worst recession in 25 years. The economy is expected to contract 1.24 percent this year, according to a central bank poll of economists.

The central bank will release the consolidated primary balance, which includes states and municipalities, on Friday. ($1 = 3.1685 Brazilian reais) (Reporting by Alonso Soto and Luciana Otoni, writing by Alonso Soto; editing by Grant McCool, Andre Grenon and Cynthia Osterman)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below