Economic Information

PRESS RELEASE - November 28, 2014

Fiscal Policy
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I - Fiscal results

In the month of October, the consolidated public sector posted a primary surplus of R$3.7 billion. The Central Government registered a primary surplus of R$4.9 billion, while regional governments and state-owned companies closed with deficits of R$741 million and R$434 million, respectively.

In the year, the primary result accumulated a deficit of R$11.6 billion, against a surplus of R$51.2 billion in the same period of 2013. In terms of 12-month cumulative flows, the primary surplus reached R$28.6 billion (0.56% of GDP), compared to R$31.1 billion (0.61% of GDP) in September.

Nominal interests appropriated on an accrual basis totaled R$21.5 billion in October, as compared to R$43.9 billion in September. Among the factors that contributed to this reduction, one should highlight the favorable R$6.8 billion result in exchange swap operations, in contrast to the previous month's unfavorable result of R$18.4 billion. In accumulated terms for the year, nominal interests reached R$230.7 billion, compared with R$194.9 billion in the same period of 2013. In 12 months, nominal interests added up to a total of R$284.6 billion (5.57% of GDP), an increase of 0.04 p.p. of GDP in relation to the previous month.

The nominal result, which includes the primary result and nominal interests appropriated on an accrual basis, posted a deficit of R$17.8 billion in October. In accumulated terms for the year, the nominal deficit reached R$242.2 billion, against R$143.8 billion in the same period of the previous year. In the last 12 months, the nominal deficit reached R$256 billion (5.01% of GDP), an upswing of 0.09 p.p. of GDP compared to the previous month.

In the month under analysis, growth of R$35.2 billion was registered under the securities debt, coupled with a rise of R$1.4 billion in net external financing, partially offset by reductions of R$11.8 billion in the net banking debt and R$7 billion in other sources of domestic financing, including the monetary base.

II - Federal securities debt

Evaluated in terms of the portfolio position, the domestic federal securities debt outside the Central Bank totaled R$2,050.8 billion (40.2% of GDP) in October, dropping R$28.2 billion against the previous month. This result reflected net redemptions of R$48.4 billion, coupled with incorporation of interests in the amount of R$20.2 billion.

It should be highlighted net redemptions of R$62 billion in LTN, R$0.7 billion in NTN-C; and R$0.3 billion in NTN-A; and issuances of LFT, R$5.9 billion; NTN-F, R$5.7 billion; NTN-B, R$2.8 billion; and CFT, R$0.5 billion.

A breakdown of the participation by indexing factor showed the following evolution in relation to September: the percentage of exchange- indexed securities remained at 0.4%; the percentage of Selic-indexed securities shifted from 13.5% to 13.7%, as a result of net LFT issuances; the percentage of fixed-rate securities dropped from 31.2% to 29.2%, due to net LTN redemptions; while inflation-linked securities remained stable at 26.6%. The participation of repo operations moved upward from 27.9% to 29.8%, posting net sales of R$54.8 billion.

In October, the maturity structure of the securities debt on the market was as follows: R$0.1 billion, 0.01% of the total, maturing in 2014; R$442.3 billion, 21.57% of the total, maturing in 2015; and R$1,608.4 billion, 78.42% of the total, maturing as of January 2016.

Overall net exposure in exchange swap operations reached R$253.5 billion. The result of these operations (difference between DI yield and exchange variation plus coupon) generated a favorable impact of R$6.8 billion for the Central Bank.

III - Public sector net debt

The public sector net debt (PSND) reached R$1,842.1 billion in October (36.1% of GDP), a rise of 0.14 p.p. of GDP compared to the previous month.

For the year as a whole, the PSND/GDP ratio rose by 2.5 p.p. of GDP. Nominal interests appropriated, the primary deficit and parity adjustment in the net external debt contributed to an upward movement of approximately 4.5 p.p., 0.2 p.p. and 0.2 p.p. of GDP, in the order. Conversely, growth of nominal GDP, 4.3% exchange devaluation accumulated in the year, and acknowledgement of assets contributed to the following reductions in the ratio: 1.7 p.p., 0.6 p.p., and 0.1 p.p. of GDP, respectively.

The Gross Central Government Debt (Federal Government, INSS, state governments and municipal governments) closed at R$3,168.7 billion in October, corresponding to 62% of GDP, an uptick of 0.3 p.p. compared to the previous month.