Brazil Sees Major Decline in October Primary Surplus

This resulted from higher spending outpacing revenue growth, leading the surplus to drop to R$ 18.277 billion ($3.729 billion).

This figure shows a considerable fall from the R$ 30.592 billion ($6.242 billion) achieved in October 2022. Adjusted for inflation, the surplus declined by 43%.

The primary surplus, indicating the government’s fiscal health excluding debt interest, usually sees an uptick in October.

This increase typically stems from financial institutions’ quarterly tax payments. However, this October’s surplus still emerged as the fourth highest on record in nominal terms.

In real terms, it ranked as the eighth largest for the month.

Despite the drop, the outcome surpassed financial analysts’ predictions. The Prisma Fiscal survey had projected a surplus of R$ 17 billion ($3.469 billion) for the month.

The Central Government’s cumulative deficit for 2023 has reached R$ 75.09 billion ($15.316 billion).

This positions it as the third largest in nominal terms and sixth in real terms.

The Government aims to reduce the deficit to about R$ 100 billion ($20.408 billion) in 2023, as per Finance Minister Fernando Haddad’s plan.

The current official forecast predicts a deficit of R$ 177.4 billion ($36.204 billion), potentially escalating to R$ 203.4 billion ($41.510 billion).

Revenue growth was overshadowed by increased spending, particularly on Bolsa Família and Social Security.

While net revenues saw a modest rise, total expenses climbed significantly.

Revenue from administered sources, like taxes, increased slightly. However, Import Tax and Cofins witnessed declines.

Royalty revenues also fell, impacted by global oil price drops.

Social and Security program expenditures rose notably, as did spending on health and defense.

Interestingly, despite salary hikes for federal employees, overall personnel expenses decreased due to reduced debt payments.

Government investment in public works and equipment purchases increased by 53.9% above inflation, reflecting variable public works project pacing.

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