Brazil Posted in December First Budget Surplus in 11 Months
Brazil posted in December its first monthly budget surplus in 11 months after the government tapped its sovereign wealth fund and profits from state companies to improve its fiscal results.
Federal and local governments, including state companies, had a a budget surplus of 3.2 billion reais ($1.6 billion) in December, up from a 21.8 billion reais deficit in November, the central bank said in a report today in Brasilia. The first budget surplus since January 2011 narrowed the annual gap to 108.9 billion reais, the central bank said.
President Dilma Rousseff’s administration had to resort to “fiscal maneuvers” this year to meet its fiscal goals after cutting taxes and boosting public spending in a bid to revive the slowest growth in three years, said Felipe Salto, an economist at Tendencias Consultoria Integrada. To achieve its budget surplus before interest payment target of 139.8 billion reais for 2012 it will have to abate some investments from the goal, even after withdrawing 12.4 billion reais from its wealth fund. The moves are in line with budget laws.
“The government is only meeting its target because of fiscal maneuvers,” Salto said in an interview from Sao Paulo. “If the government continues to use these tools, the perception of risk will increase and it will be harder for the government to finance itself.”
The so-called primary surplus widened to 104.95 billion reais in the 12 months through December, compared with 82.70 billion reais a month earlier, the central bank said. The government will reduce 34.9 billion reais in investments from its target, meeting its 2012 goal, Fernando Rocha, the deputy- chief of the central bank’s economic research department said.
Rocha forecast the country’s net debt will fall in 2013 to 33.2 percent of gross domestic product from 35.1 percent last year.
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