Economic Information

PRESS RELEASE - August 30, 2017

Fiscal Policy
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I - Fiscal results

In July, the consolidated public sector posted a primary deficit of R$16.1 billion. The Central Government and state governments turned in a primary deficit of R$14 billion and R$2.7 billion, respectively, and state-owned companies, a surplus of R$491 million.

In the year, the consolidated public sector registered a primary deficit of R$51.3 billion, compared with a deficit of R$36.6 billion in the same period of 2016. In the 12-month period up to July, the cumulative primary deficit reached R$170.5 billion (2.66% of GDP), 0.05 p.p. of GDP higher than the cumulative deficit up to June.

Consolidated public sector's nominal interests, appropriated on an accrual basis, reached R$28.5 billion in July, compared with R$31.5 billion in June. This trajectory reflected gains of R$5.1 billion with foreign exchange swap operations in the month, compared with a loss of R$546 million in the previous month. In the year, cumulative nominal interests reached R$235.1 billion, compared with R$213.9 billion in the same period of the previous year. Nominal interests reached R$428.2 billion (6.69% of GDP) over twelve months, falling 0.2 p.p. of GDP compared with the June's result.

The consolidated public sector's nominal result, which includes the primary result and nominal interests appropriated, posted a deficit of R$44.6 billion in July. In the year, the nominal deficit totaled R$286.4 billion, compared with a deficit of R$250.5 billion in the same period of the previous year. In the 12-month period, the nominal deficit reached R$598.7 billion (9.35% of GDP), falling 0.15 p.p. of GDP when compared with the previous month's deficit.

July's nominal deficit was financed by expansions of R$70.2 billion in the securities debt, partially offset by reductions of R$19.5 billion in net bank debt, R$4.3 billion in other domestic financing sources, including the monetary base, and R$1.7 billion in net external financing.

II - Federal securities debt

The domestic federal securities debt, outside the Central Bank, evaluated by the portfolio position, totaled R$3,225 billion (50.4% of GDP) in July, decreasing by R$8.7 billion in comparison with the previous month. This result reflected net redemptions of R$33.7 billion, a decline of R$0.8 billion due to currency appreciation, and incorporation of interests worth US$25.9 billion.

Items worth highlighting were net redemptions of R$33.1 billion in LTN; R$13.7 billion in NTN-C; R$12.5 billion in NTN-F; and R$0.5 billion in CFT-E; and net issuances of R$20.3 billion in LFT and R$5.9 billion in NTN-B.

The participation by indexing factors registered the following evolution when compared to June: the percentage of exchange-indexed securities remained stable at 0.3%; Selic-indexed securities rose from 23.8% to 24.1%, due to net issuances of LFT; fixed-rate securities fell from 27.1% to 25.9%, due to net redemptions of LTN and NTN-F; and inflation-indexed securities decreased from 23.5% to 23.1%, due to net redemptions of NTN-C. The participation of repo operations rose from 25% to 26.4%, showing net sales of R$70.7 billion.

In July, the maturity structure of the securities debt in the market was as follows: R$117 billion, 3.6% of the total, maturing in 2017; R$472.8 billion, 14.7% of the total, maturing in 2018; and R$2,635.2 billion, 81.7% of the total, maturing as of January 2019.

At the end of July, the total net exposure in foreign exchange swap operations reached R$85.6 billion. The result of these operations in the month on the cash basis (liability position in Selic rate and asset position in exchange variation plus coupon) was favorable to the Central Bank in the amount of R$5.1 billion.

III - Public Sector Net Debt (PSND) and General Government Gross Debt (GGGD)

The PSND reached R$3,206.1 billion (50.1% of GDP) in July, increasing 1.4 p.p. of GDP compared with the previous month. The impact of the 5.37% currency appreciation in the month accounted for an increase of R$54.7 billion in the PSND stock, corresponding to 0.9 p.p. of GDP.

In the year, the PSND/GDP ratio increased 3.9 p.p. as a result of the incorporation of nominal interests (increase of 3.7 p.p.), the primary deficit (increase of 0.8 p.p.), the accumulated currency appreciation of 3.9% (increase of 0.6 p.p.), the acknowledgement of debts (increase of 0.1 p.p.), the effect of nominal GDP growth (decrease of 1.0 p.p.), and the parity adjustment of the basket of currencies that compose the net external debt (reduction of 0.2 p.p.).

The GGGD (Federal Government, INSS, state and municipal governments) reached R$4,722.1 billion in July (73.8% of GDP), rising 0.6 p.p. of GDP as compared with the previous month.