Economic Information

PRESS RELEASE - November 29, 2017

Fiscal Policy
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I - Fiscal results

The consolidated public sector registered a primary surplus of R$4.8 billion in October. The Federal Government and regional governments posted respective surpluses of R$5 billion and R$352 million, while state-owned companies turned in a deficit of R$562 million.

In the year, the consolidated public sector registered a primary deficit of R$77.4 billion, compared to a deficit of R$45.9 billion observed in the same period in 2016. In the 12-month period up to October, the primary deficit reached R$187.2 billion (2.88% of GDP), an increase of 0.53 p.p. GDP compared to the deficit registered in September.

Nominal interests of the consolidated public sector, appropriated on an accrual basis, reached R$35.3 billion in October, compared to R$32 billion in September. The greater number of working days in the month and the more unfavorable result with foreign exchange swap operations (loss of R$1.8 billion in October compared to loss of R$188 million in September) contributed to this increase. Cumulative nominal interests in the year amounted to R$338.4 billion, compared to R$331.2 billion in the same period of the previous year. In twelve months, nominal interests added up to R$414.2 billion (6.37% of GDP), a decrease of 0.03 p.p. GDP in relation to the value registered in September.

The nominal result of the consolidated public sector, which includes the primary result and appropriated nominal interests, posted a deficit of R$30.5 billion in October. In the year, the nominal deficit totaled R$415.7 billion, compared to a deficit of R$377.2 billion in the same period of the previous year. In the 12-month period, the nominal deficit reached R$601.4 billion (9.25% of GDP), an increase of 0.49 p.p. of GDP compared to the deficit observed in the previous month.

The nominal deficit of October was financed through expansions of R$29.4 billion in the government securities debt, R$4.8 billion in the net bank debt and R$3.8 million in the net external financing, partially counterbalanced by the reduction of R$7.5 billion in the other sources of domestic financing, which includes the monetary base.


II - Federal government securities debt

The domestic Federal Government securities debt, outside the Central Bank, evaluated by the portfolio position, totaled R$3,311.4 billion (50.9% of GDP) in October, dropping by R$0.5 billion in relation to the previous month. This result reflected net redemptions of R$25.6 billion, an increase of R$0.5 billion due to the exchange rate depreciation, and incorporation of interests worth R$24.6 billion.

It should be highlighted net redemptions of R$52.1 billion in LTN, R$0.9 billion in NTN-C and R$0.3 billion in NTN-A; coupled with net issuances of R$14.1 billion in LFT; R$9.1 billion in NTN-F; and R$4.8 billion in NTN-B.

The participation by indexing factors registered the following evolution in relation to September: 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 27.3% to 26.4%, due to net redemptions of LTN; and inflation-indexed securities rose from 23.0% to 23.1%, due to net issuances of NTN-B. The participation of repurchase operations increased from 25.4% to 25.9%, consequent upon net purchases of R$22.8 billion.

In October, the maturity structure of the government securities debt on the market was as follows: R$0.1 billion, 0.003% of the total, maturing in 2017; R$486 billion, 14.7% of the total, maturing in 2018; and R$2,825.3 billion, 85.3% of the total, maturing as of January 2019.

At the end of October, the total net exposure in currency swap operations reached R$77.9 billion. The result of these operations in the month according to the cash concept (liabilities linked to the Selic rate and assets linked to the exchange rate plus exchange coupon), was unfavorable to the Central Bank in the amount of R$1.8 billion.


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

PSND reached R$3,298.6 billion (50.7% of GDP) in October, a decline of 0.1 p.p. in relation to the previous month. The exchange devaluation of 3.4% in the month contributed with R$33.3 billion (0.5 p.p. of GDP) of this reduction.

In the year, the increase of 4.6 p. p. in the PSND/GDP ratio was due to the incorporation of nominal interests (+5.2 p.p.), to the primary deficit (+1.2 p.p.), the acknowledgement of debts (+0.1 p.p.), the cumulative exchange rate devaluation of 0.5% (-0.1 p.p.), the parity adjustment of the net foreign debt's currency basket (-0.2 p.p.), and the effect of the nominal GDP growth (-1.7 p.p.).

GGGD (Federal Government, INSS, state and municipal governments) reached R$4,837.2 billion in October (74.4% of GDP), an expansion of 0.5 p.p. of GDP in relation to the previous month.