Brazil government forecasts first primary surplus in nine years for 2022

Brazil’s Economy Ministry will publish its first estimate of a primary surplus in nine years on Thursday but will freeze additional spending to comply with a constitutional spending limit, two department officials told Reuters.

The sources, who spoke anonymously, said the 2022 budget surplus before interest payments are now estimated at R$13 billion (US$2.5 billion) for the central government, including Brazil’s Finance Ministry, Central Bank, and Social Security.

The forecast will be part of the government’s bimonthly revenue and expenditure report, released Thursday.

In July, the ministry had forecast a primary gap of R$59.4 billion.

However, internal estimates reported by Reuters last month pointed to the central government’s first primary surplus since 2013, made possible by record tax revenues and generous dividends from state oil company Petrobras in the face of rising commodity prices.

If confirmed, the result will far exceed the official budget target for 2022, which was a primary deficit of R$170.5 billion.

Economy Minister Paulo Guedes said the positive budget outlook was based on one-off factors and the government’s reforms, which have helped boost private investment and lower the unemployment rate.