Brazil’s budget surplus before interest payments rose to a record in January, as federal tax revenue jumped and state governments swung from a deficit to a surplus.
Federal and local governments, including state companies, had a primary surplus in December of 30.3 billion reais ($15.3 billion), up from a 22.3 billion reais surplus a month earlier, the central bank said in a report today in Brasilia. The surplus was larger than every estimate from 11 analysts surveyed by Bloomberg, whose median forecast was for a surplus of 25 billion reais. After interest payments, the budget had a surplus of 7.6 billion reais.
President Dilma Rousseff’s government may loosen fiscal rules for the second year in a row to meet the country’s primary surplus target, as Brazil’s $2.5 trillion economy responds slowly to stimulus. Brazil will allow as much as 65 billion reais in infrastructure and tax deductions to meet this year’s 155.9 billion reais primary surplus goal, a government official with knowledge of the proposal said this month. Authorities have signaled plans to extend tax cuts for companies and consumers while increasing spending to spur growth this year.
Government officials in 2012 tapped a sovereign wealth fund and included billions of dollars in infrastructure spending to meet the primary surplus target after tax income dropped. Such actions are permitted under Brazilian law.
Brazil’s federal tax revenue in January rose 13.2 percent from the year before to 116.07 billion reais, the tax agency said on Feb. 25. State governments posted a surplus of 3.8 billion reais in January, after a deficit of 4 billion reais the month before.
Net debt rose to 35.2 percent of gross domestic product from 35.1 percent in December, the central bank said today.
Swap rates on the contract maturing in January 2014, the most traded in Sao Paulo today, fell three basis points, or 0.03 percentage point, to 7.78 percent at 10:40 a.m. local time. The real was little changed at 1.9830 per U.S. dollar.
Brazil’s economy expanded by 1 percent last year, the central bank estimated in December. Economists in the latest weekly central bank survey forecast growth of 3.1 percent this year.