Economic Information

PRESS RELEASE - August 29, 2014

Fiscal Policy
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I - Fiscal results

In the month of July, the consolidated public sector posted a primary deficit of R$4.7 billion. The Central Government, regional governments and state-owned companies turned in primary deficits of R$1.9 billion, R$2.2 billion and R$603 million, respectively.

In the year, the cumulative surplus reached R$24.7 billion, against R$54.4 billion in the same period of 2013. In terms of 12-month cumulative flows, the primary surplus reached R$61.5 billion (1.22% of GDP), compared to R$68.5 billion (1.36% of GDP) in the month of June.

Nominal interests appropriated on an accrual basis totaled R$28 billion in July, compared to R$18.7 billion in June. The increase in the number of business days and the unfavorable result of exchange swap operations in the month contributed to this increase. In cumulative figures for the year, nominal interest climbed to R$148.2 billion, against R$141.5 billion in the same period of 2013. In 12 months, nominal interests totaled R$255.6 billion (5.06% of GDP), an increase of 0.06 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$32.7 billion in July. In cumulative terms for the year, the nominal deficit reached R$123.6 billion, against R$87 billion in the same period of the previous year. In the last 12 months, the nominal deficit rose to R$194.1 billion (3.84% of GDP), an increase of 0.21 p.p. of GDP in relation to the preceding month.

The month under analysis witnessed expansion of R$40.9 billion in the securities debt and R$1.2 billion in other sources of domestic financing, including the monetary base, partially offset by a reduction of R$5.8 billion in the net banking debt and R$3.6 billion in net external financing.

II - Federal securities debt

Evaluated according to the portfolio position, the internal federal securities debt outside the Central Bank totaled R$2,082 billion (41.2% of GDP) in July, registering a decline of R$29.3 billion compared to the previous year. This result reflected net redemptions of R$51.9 billion, an expansion of R$0.3 billion as a result of exchange depreciation and incorporation of R$22.4 billion in interests.

It should be highlighted net redemptions of R$47.9 billion in LTN, R$12.1 billion in NTN-F and R$2.7 billion in NTN-C; and issuances of R$6.3 billion in LFT and R$4.7 billion in NTN-B.

A breakdown by indexing factors shows the following evolution in comparison to the month of June: the percentage of exchange-indexed securities remained at 0.4%; that of securities linked to the Selic rate increased from 15.1% to 15.2% as a result of LFT issuances; and the percentage of fixed rate securities dropped from 32.4% to 30.2%, due to net redemptions of LTN and NTN-F; and the percentage of inflation-indexed securities shifted from 29.2% to 29.1%. The participation of repo operations increased from 22.6% to 24.8%, with net sales of R$63.6 billion.

In July, the maturity structure of the securities debt on the market was as follows: R$178.2 billion, 8.6% of the total, maturing in 2014; R$405.2 billion, 19.5% of the total, due in 2015; and R$1,498.6 billion, 72% of the total, maturing from January 2016 onwards.

Total net exposure in exchange swap operations reached a level of R$211.5 billion. The result of these operations (difference between DI yield and exchange variation plus coupon) was unfavorable to the Central Bank, closing at R$2.6 billion.

III -Public sector net debt (PSND)

In July, the PSND reached R$1,772.9 billion (35.1% of GDP), an increase of 0.1 p.p. of GDP compared to the previous month.

In the year as a whole, the PSND/GDP ratio increased 1.5 p.p. Nominal interests appropriated and 3.2% exchange valuation contributed to raising the ratio approximately 2.9 p.p. and 0.5 p.p. of GDP. In the opposite sense, nominal GDP growth and the primary surplus contributed to reducing the ratio 1.4 p.p. and 0.5 p.p. of GDP, respectively.

The Gross General Government Debt (Federal Government, Social Security, state and municipal governments) totaled R$2,983.1 billion in the month of July, 59% of GDP, corresponding to an increase of 0.5 p.p. of GDP when compared to the previous month.