Brazil’s April Budget Surplus Wider Than Economists Estimated

Brazil’s budget surplus in April was larger than economists estimated, as President Dilma Rousseff’s economic team works to fortify fiscal accounts in Latin America’s largest economy.

The nominal budget surplus in April was 11.2 billion reais ($3.5 billion), larger than the median estimate of a 5 billion reais surplus. That was a reversal from a deficit of 69.2 billion reais a month earlier.

The primary surplus, excluding interest payments, was 13.4 billion reais, above the median forecast of a 12.5 billion-reais surplus from 17 economists surveyed by Bloomberg. The primary deficit as a percentage of gross domestic product over 12 months was 0.76 percent, the central bank said Friday.

Finance Minister Joaquim Levy is spearheading efforts to trim the budget deficit by cutting spending and undoing tax breaks, aiming to avert a sovereign credit downgrade to junk amid prospects of the worst recession in 25 years. The government’s austerity plans received a boost this week, as Congress approved bills to cap pensions and reduce jobless benefits.

Swap rates on the contract due in January 2016, the most traded in Sao Paulo today, rose four basis points, or 0.04 percentage point, to 13.83 percent at 10:53 local time. The real weakened 0.2 percent to 3.1680 per U.S. dollar.

Four Months

The central government budget results have been lagging economists’ estimates in the first four months of Levy’s term as minister, as a slowing economy hurts tax collection. Levy has pledged to deliver a primary surplus equivalent to 1.1 percent of gross domestic product this year.

Congress approved three austerity bills this week, in a move billed by Levy as the first step of the country’s fiscal adjustment. The government also announced a 69.9 billion reais budget freeze last Friday.

Brazil’s economy contracted 0.2 percent in the first quarter, the national statistics agency reported Friday. Analysts surveyed by the central bank have lowered their 2015 gross domestic product estimate in 17 of the past 19 weeks, to a decline of 1.24 percent. That would be the steepest fall in a quarter century.

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