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Brazilian public sector posted primary deficit

Staff writer ▼ | August 1, 2014
The consolidated public sector, federal, state, municipal government and state-owned companies, posted a primary deficit for the second month in a row. In June, the primary deficit reached $937.39 million (R$ 2.1 billion).
Brazil street market
The second month in a row   Problems in the land of samba
In May, the deficit ran at $4.93 billion (R$ 11.046 billion). This was the first time in the Brazilian Central Bank's (BC) historical series that a primary deficit was posted in the month of June. The historical series was initiated in December 2001. Last June posted a primary surplus of $2.423 billion (R$ 5.429 billion).

With these results, H1 primary surplus is running at $13.114 billion (or R$ 29.380 billion), as against $23.282 billion (R$ 52.158 billion) posted in H1 2013. In the twelve-month period ended June, primary surplus reached $30.589 billion (R$ 68.528 billion), the equivalent to 1.36% of the Gross Domestic Product (GDP), i.e. the sum of all goods and services produced in the country. The target for the public sector this year is 1.9% of the GDP.

Primary surplus is savings to pay interests on public debt. The fiscal effort allows for a medium- to long-run reduction in government indebtedness.

Last month, the negative result was driven mainly by the Central Government (National Treasury, Social Security and Central Bank). The primary deficit ran at $1.219 billion (R$ 2.732 billion).

State governments posted a primary deficit of $76.33 million (R$ 171 million) and the municipal governments a surplus of $126.77 (R$ 284 million). State-owned companies, not including the groups Petrobras and Eletrobas, posted a primary surplus of $231.22 million (R$ 518 million).