Brazil Primary Budget Surplus Widens To BRL11.6B

May 01, 2009

Buoyed by rising tax revenue, Brazil's public sector primary budget surplus widened in March to 11.6 billion Brazilian reals ($5.3 billion), the Brazilian Central Bank said Thursday.

Tax revenue rose in March to BRL53.3 billion from BRL45.1 billion in February, traditionally a weak month for tax collections because of holidays. Brazil's public sector primary budget surplus in February was BRL4.1 billion.

However, Brazil's 12-month primary budget surplus narrowed to BRL95.92 billion in March from BRL99.7 billion in February.

The 12-month figure as of March was equal to 3.29% of gross domestic product, slightly lower than the 3.4% represented by the February figure.

As of March, Brazil's primary budget surplus was well within the government's target for the year, which calls for a surplus equal to at least 2.5% of GDP. Earlier this month, the government altered the target to 2.5% from a previous 3.8% in order to free up funds for public works spending in the face of a persistent recession.

In March, the central government contributed BRL5.82 billion to the primary surplus, while state and municipal governments contributed BRL2.23 billion and corporations owned by government agencies contributed BRL3.57 billion.

Primary budget figures do not include debt service payments. With debt service payments included, Brazil posted a March nominal public sector deficit of BRL2.5 billion. The March figure narrowed considerably from BRL6.07 billion in February.

The 12-month nominal deficit as of March was BRL65.2 billion, or 2.23% of GDP. Those figures widened from February's 12-month deficit of BRL58.7 billion equal to 2.02% of GDP.

Brazil's net public sector debt was stable in March against the February figure at BRL1.1 trillion. However, the March figure represented 37.6% of GDP, up from 37.1% as of February as the government lowers its GDP expectations.

By: Gerald Jeffris and Tom Murphy

Source: Dow Jones (www.dowjones.com)