Public accounts closed the month of May with a negative balance, mainly as a result of the drop in extraordinary revenues of state and municipal governments. The consolidated public sector – made up of the Union, states, municipalities and state-owned companies – recorded a primary deficit of BRL 50.172 billion last month, compared to a primary deficit of BRL 32.993 billion in May 2022. The data was released this Friday ( 30) by the Central Bank (BC). The primary deficit represents the negative result of public sector accounts (expenses minus revenues), disregarding the payment of interest on the public debt. According to the head of the Department of Statistics of the BC, Fernando Rocha, in the interannual comparison, the drop in revenue from regional governments was responsible for the worsening of the primary result by R$ 14.1 billion. Public accounts last month registered the second worst result for the month of May in the historical series started in December 2001, behind data from May 2020, when the primary deficit was R$ 131 billion. “That month was the peak of the covid-19 pandemic and all the economic measures to combat its effects were revealed in the deficit at that moment”, explained Rocha. In 12 months, ending in May, the accounts accumulate a primary surplus of R$ 39.023 billion, which corresponds to 0.38% of the Gross Domestic Product (GDP, sum of all goods and services produced in the country). Rocha explained that, considering the result in 12 months, there was a peak in the primary surplus in August last year, when it reached R$ 230.6 billion (2.44% of GDP). Since then, this positive result has been falling in the accumulated in 12 months, this being the tenth consecutive monthly reduction. In 2022, public accounts ended the year with a primary surplus of BRL 125.994 billion, 1.28% of GDP. Government spheres Last month, the Central Government (Social Security, Central Bank and National Treasury) presented a primary deficit of BRL 43.188 billion, compared to a deficit of BRL 40.018 billion in May 2022. The result is explained by the increase in expenses in BRL $22 billion, partially covered by the R$18 billion increase in revenues. The amount of the Central Government deficit differs from the result disclosed yesterday (29) by the National Treasury, of a deficit of R$ 45 billion in May, because, in addition to considering local and state governments, the BC uses a different methodology, which takes taking into account the variation in the debt of public entities. State governments also had a deficit last month, of BRL 5.527 billion, compared to a surplus of BRL 5.786 billion in May 2022. Municipal governments, on the other hand, noted a deficit of BRL 1.289 billion in May of this year. In the same month of 2022, there was a surplus of BRL 1.546 billion for these entities. In total, regional governments (state and municipal) had a deficit of BRL 6.816 billion in May 2022 against a positive result of BRL 7.332 billion in the same month of 2022. The worsening in the interannual result is explained by the 21.6% reduction , last month, in regular transfers from the federal government, within the scope of tax sharing and other federal norms. Fernando Rocha explained that, in fact, the basis for comparison in May 2022 is high. “In May 2022, a BRL 8 billion oil transfer signing bonus was transferred. There was this big transfer last year and it was not repeated this year”, he said, in a press conference to present the fiscal statistics. In addition, there was a 12% reduction in revenues from the Tax on the Circulation of Goods and Services (ICMS), the main source of revenue for state and municipal governments. Federal, state and municipal state companies, excluding those of the Petrobras and Eletrobras groups, had a primary deficit of R$ 168 million last month. Interest expenses Interest expenses totaled BRL 69.053 billion last month, against BRL 32.979 billion in May 2022. In this increase, there are the effects of Central Bank operations in the exchange market (exchange swap, which is the sale of dollars in the futures market), which, in this case, contributed to the worsening of the interest account in the annual comparison. The results of these operations are transferred to the payment of interest on the public debt, as income when there are gains and as expenses when there are losses. Last month, the swaps account had losses of BRL 3 billion, against gains of BRL 26.7 billion in May 2022. In the interannual comparison, the increase in the debt stock and the rise in interest also contributed to the evolution of interest rates. Selic rate in the period, which increased from 12.75% per year in May last year to the current 13.75% per year. On the other hand, the drop in inflation helps to reduce the interest account. The nominal result – formed by the primary result and interest expenses – also increased in the interannual comparison. In May, the nominal deficit was BRL 119.226 billion, against the negative result of BRL 65.971 billion in the same month of 2022. In 12 months, the public sector accumulates a deficit of BRL 656.549 billion, or 6.39% of GDP. The nominal result is taken into account by risk rating agencies when analyzing a country’s indebtedness, an indicator observed by investors. Public debt The public sector’s net debt (balance between the total credits and debts of federal, state and municipal governments) reached R$ 5.935 trillion in May, which corresponds to 57.8% of GDP. In April, the percentage of net debt in relation to GDP was at 57%. In May of this year, the gross debt of the general government (DBGG) – which includes only the liabilities of federal, state and municipal governments – reached R$ 7.563 trillion or 73.6% of GDP, against R$ 7.456 trillion (72. 9% of GDP) in the previous month. Like the nominal result, gross debt is used to draw international comparisons.
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