Public Accounts Record Primary Deficit of R$61.872 Billion in 2019

RIO DE JANEIRO, BRAZIL – The consolidated public sector, made up of the federal, state, and municipal government plus state-owned companies, recorded a primary deficit of R$61.872 (US$15.4) billion last year. The data were released on January 31st, by the Central Bank.

It was the sixth consecutive year with negative results in the public accounts. Nevertheless, 2019 figures are the best since 2014, when the deficit had reached R$32.536 billion. The result also represents a great improvement in relation to 2018, when the accounts were negative by R$108.258 billion.

The negative balance in 2019 represents 0.85 percent of the Gross Domestic Product (GDP), the sum of all goods and services produced in the country.

The primary deficit represents the negative result of the public sector accounts, disregarding interest payments on public debt. The amount differs from the result released on Wednesday, January 29th, by the National Treasury, of a R$ 95.1 billion deficit, given that the Central Bank uses a different methodology that considers the variation in the debt of public bodies, in addition to considering local and state governments.

Last year, according to the Central Bank, the Central Government (National Treasury, Social Welfare and the Central Bank) had a primary deficit of R$88.899 billion. The negative result was partially offset by the R$15.196 billion surplus recorded by states and municipalities and R$11.831 billion by state-owned companies, excluding Petrobras and Eletrobras.

The Central Bank’s result is considered for compliance with the fiscal target established in the Budget Guidelines Law and in the General Budget of the Union, which stood at up to R$132 billion in primary deficit for the three levels of government and state-owned companies for 2019.

Results for the month

In December 2019, the consolidated public sector recorded a primary deficit of R$13.513 billion, a lower result than the same period in 2018, when it reached R$41.133 billion.

Last month, according to the Central Bank, the Central Government recorded a primary deficit of R$16.100 billion. States and municipalities recorded deficits of R$7.136 billion; and state-owned companies, excluding those of Petrobras and Eletrobras groups, had a primary surplus of R$9.724 billion.

Interest expenses

Expenses with public debt interest totaled R$24.920 billion last month, against R$26.909 billion in December 2018. Nominal interest rates reached R$367.282 billion (5.06 percent of GDP), a lower result compared to 2018, when they reached R$379.184 billion.

The nominal deficit, represented by the sum of the primary result and interest, reached R$38.43 billion in December and R$429.154 billion in the accumulated 2019 figure (5.91 percent of GDP).

The nominal result is considered by rating agencies when analyzing a country’s debt. The greater the shortfall in public accounts the worse the investment recommendation is because a country is not succeeding in saving to pay off public debt.

The gross public sector debt fell in 2019 to R$5.500 trillion, 75.8 percent of GDP. In 2018, the indicator reached 76.5 percent of GDP (R$5.271 trillion). Similarly to the nominal result, the gross debt is used by risk rating agencies to draw international comparisons.

Source: Infomoney