Brazil’s Central Government had a primary surplus of US$2.1 billion in September

The payment of dividends by Petrobras and record revenues made the public accounts register, in September, the second-highest positive result in the historical series for the month.

Last month, the Central Government – National Treasury, Social Security, and the Central Bank – registered a primary surplus of R$11 billion (US$2.1 billion), the National Treasury announced today.

In nominal values, this is the second largest surplus for the month since the beginning of the historical series, second only to September 2010.

Discounting inflation by the National Wide Consumer Price Index (IPCA), the result was the sixth best in the historical series, which started in 1995.

The result was better than expected by financial institutions.

According to the Fiscal Prism survey released monthly by the Ministry of Economy, market analysts expected a negative result of R$847.6 million in September.

With the September result, the Central Government closed the first nine months of the year with a positive result of R$33.8 billion.

When corrected for inflation, this is the best result for January to September 2013.

The primary result represents the difference between revenue and spending, disregarding the interest payment on public debt.

Despite the possibility of a deficit in the coming months, the economic team estimates that the Central Government will close the year with a primary surplus of R$13.6 billion, the first positive annual result since 2013.

According to the National Treasury, the surplus could reach R$37.5 billion in 2022 were it not for the agreement on the control of Campo de Marte Airport in São Paulo.

Through the agreement, the Federal Government paid R$23.9 billion to the City of São Paulo in exchange for the extinction of the lawsuit that questioned the control of Campo de Marte Airport, in São Paulo’s capital.

The surplus forecast occurs even with the constitutional amendment that will increase social spending by R$41.3 billion in the second half of the year and with the tax breaks of R$71.6 billion that will take effect in 2022.

The estimate was released in the latest edition of the Bimonthly Report of Revenue and Expenditure Evaluation.

REVENUES

Revenues continue to grow faster than expenses.

Last month, net revenues grew 14% compared to September last year in nominal terms. After discounting inflation by the National Wide Consumer Price Index (IPCA), the growth reached 6.4%.

In the same period, total expenses rose 6% in nominal values but fell 1.1% after discounting inflation.

Concerning tax payments, there was a growth of R$2.9 billion above inflation in income tax, motivated mainly by the increase in company profits.

In great part, this increase reflects the increase in profits of energy and oil companies at the beginning of the year, which helps to partially offset the tax breaks for industry and fuel.

The rise in oil prices on the international market also contributed to Petrobras’ record dividend payment, which totaled R$12.6 billion in September.

The dividends are the portion of the company’s profit to shareholders.

In the case of state-owned companies, the National Treasury receives most of the dividends since it is the main controlling shareholder.

With the rising oil price on the international market, revenues from royalties grew R$1.7 billion (31.5%) above inflation last month compared to September 2021.

Currently, the international barrel price is around US$90 because of the war between Russia and Ukraine.

EXPENSES

On the expenditure side, there was a drop of R$7.9 billion in extraordinary credits and R$2.3 billion in health expenditures, mainly the expenses associated with fighting the covid-19 pandemic.

However, this decline was offset by an increase in other expenditures.

Spending on social programs rose after the constitutional amendment that increased the value of the Brazil Aid and created the Taxi Driver and Trucker Aid.

With the Brazil Aid alone, the impact of the readjustment of the minimum value of the benefit to R$600 corresponded to R$5 billion in September.

Year-to-date, the increase in discretionary spending (not mandatory) with flow control reaches R$48.5 billion (43%) above the IPCA.

This category includes social programs, such as Auxílio Brasil.

On the other hand, spending on federal civil servants fell by 7.3% in the year to date, discounting inflation.

The drop reflects the freezing of civil servants’ salaries between July 2020 and December 2021 and the lack of adjustments in 2022.

Concerning investments (public works and equipment purchases), the federal government invested R$29.5 billion in the year’s first nine months.

The value represents a drop of 15.4%, discounting the IPCA compared to the same period in 2021.

With information gtom Agência Brasil