Economic Information

PRESS RELEASE - September 30, 2014

Fiscal Policy
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I - Fiscal results

The consolidated public sector registered a primary deficit of R$14.5 billion in August. The Central Government, regional governments and state enterprises turned in primary deficits of R$12 billion, R$2.3 billion and R$173 million, respectively.

In the year, the cumulative surplus reached R$10.2 billion, compared to R$54 billion in the same period in 2013. In terms of 12-month flows, the primary surplus totaled R$47.5 billion (0.94% of GDP), against R$61.5 billion (1.23% of GDP) in July.

Nominal interests appropriated on an accrual basis reached R$17 billion in August, compared to R$28 billion in July. This trajectory was due to the lower number of working days in the month and the reversal of the result of swap exchange operations from unfavorable to favorable. In the year up to August, cumulative nominal interests added up R$165.3 billion, compared to R$163.4 billion in the same period in 2013. In 12-month terms, nominal interests totaled R$250.8 billion (4.97% of GDP), decreasing by 0.13 p.p. of GDP from July.

The nominal result, including the primary result plus nominal interests appropriated on an accrual basis, registered a deficit of R$31.5 billion in August. In the year up to August, the cumulative deficit reached R$155.1 billion, compared to R$109.3 billion in the same period in 2013. In the 12-month period, the nominal deficit reached R$203.3 billion (4.03% of GDP), up 0.16 p.p. of GDP from July.

In the month, expansions were observed in the in securities debt, R$39.8 billion, in other sources of internal financing, including the monetary base, R$7.7 billion, and in net external financing, R$6.6 billion, which were partially offset by the reduction in the net banking debt, R$22.6 billion.

II - Federal securities debt

The federal securities debt outside the Central Bank, evaluated by the portfolio position, totaled R$2,075.1 billion (41.1% of GDP) in August, a decrease of R$6.9 billion against July. This result reflected net redemptions of R$22.4 billion, a decrease of R$0.1 billion due to the currency appreciation, and the incorporation of interests, R$15.6 billion.

It should be highlighted net redemptions of R$53.4 billion in NTN-B; and issuances of R$22 billion in LTN, R$6.1 billion in NTN-F, and R$3.4 billion in LFT.

The participation by indexing factor showed the following changes when compared to July: the percentage of exchanged-indexed securities remained stable at 0.4%; the percentage of Selic-indexed securities increased from 15.2% to 15.3%, due to issuances of LFT; the percentage of fixed-rate securities increased from 30.2% to 31%, due to net issuances of LTN and NTN-F; and the percentage of inflation-indexed securities decreased from 29.1% to 26.9%, due to net redemptions of NTN-B. The share of open market operations increased from 24.8% to 26.1%, with net sales of R$40.8 billion.

In August, the maturity schedule of the securities debt on the market was as follows: R$134.9 billion, 6.5% of the total, maturing in 2014; R$413.3 billion, 19.9% of the total, maturing in 2015; and R$1,526.9 billion, 73.6% of the total, maturing as from January 2016.

The total net exposure on swap exchange operations reached R$209.1 billion at the end of August. The result of these operations (the difference between the ID profitability and the exchange variation plus coupon) was favorable to the Central Bank by R$2.5 billion.

III - Public sector net debt

Brazil's public sector net debt (PSND) reached R$1,812.5 billion in August (35.9% of GDP), up 0.6 p.p. of GDP from July.

In the year, the PSND/GDP ratio rose by 2.3 p.p. Nominal interests appropriated and the currency appreciation of 4.4% in the year contributed to increase the ratio by 3.3 p.p. and 0.6 p.p. of GDP, respectively. Conversely, the nominal GDP growth, the primary surplus and the acknowledgment of assets contributed to reduce the ratio by 1.3 p.p., 0.2 p.p. and 0.1 p.p. of the GDP, respectively.

Brazil's General Government Gross Debt (Federal Government, INSS, state and municipal governments) reached R$3,034.7 billion in August, 60.1% of GDP, an increase of 0.7 p.p. of GDP over the previous month.