Economic Information

PRESS RELEASE - June 30, 2017

Fiscal Policy
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I - Fiscal results

The consolidated public sector registered a primary deficit of R$30.7 billion in May. The Central Government posted a primary deficit of R$32.1 billion, while regional governments and state-owned companies turned in respective primary surpluses of R$894 million and R$475 million.

In the year, the cumulative primary result reached a deficit of R$15.6 billion, compared with a deficit of R$13.7 billion in the same period in 2016. In the 12-month period, there was a primary deficit of R$157.7 billion (2.47% of GDP) posted, 0.19 p.p. of GDP higher than the deficit recorded in April.

Nominal interest appropriated on an accrual basis, appropriated by competence, reached R$36.3 billion in May, compared with R$28.3 billion in April. The greater number of working days in the month contributed to this increase. Cumulative nominal interests in the year amounted to R$175.1 billion compared with R$151.2 billion in the same period of the previous year. Nominal interest reached R$430.9 billion (6.75% of GDP) over twelve months, falling by 0.11 p.p. of GDP compared with the value recorded in April.

The nominal result, which includes the primary result and nominal interests appropriated on an accrual basis, posted a deficit of R$67 billion in May. In the year, the nominal deficit totaled R$190.7 billion, compared with a deficit of R$164.9 billion in the same period of the previous year. In the 12-month period, the nominal result posted a deficit of R$588.6 billion (9.22% of GDP), rising by 0.08 p.p. of GDP compared with the result, which was also a deficit, recorded in the previous month.

The nominal deficit in October was financed through expansions of R$77.4 billion in securities debt, R$15.7 billion in net bank debt and R$440 million in net external financing, which were partially offset by the contraction of R$26.5 billion in other domestic sources of domestic financing, which include the monetary base.

II - Federal securities debt

The domestic federal securities debt, outside the Central Bank, evaluated by the portfolio position, totaled R$3,130.2 billion (49% of GDP) in May, growing by R$6.9 billion compared with the previous month. This result reflected net redemptions of R$19.3 billion, growing by R$0.2 billion due to the exchange rate appreciation and incorporation of interest R$26.1 billion.

Items worth highlighting were net redemptions of R$52.8 billion in NTN-B and R$0.5 billion in CFT-E; and net issuances of R$20.8 billion in LTN, R$9.2 billion in LFT and R$4.2 billion in NTN-F.

The participation by indexing factors registered the following evolution in relation to April: the percentage of exchange-indexed securities remained stable at 0.3%; Selic-indexed securities remained stable at 22.9%; fixed-rate securities grew from 26% to 26.4%, due to net issuances of LTN; and inflation-indexed securities decreased from 24.9% to 23.3%, due to net redemptions of NTN-B. The participation of repo operations increased from 25.6% to 26.8%, showing net sales of R$61.1 billion.

In May, the maturity structure of the securities debt in the market was as follows: R$186.5 billion, 6% of the total, maturing in 2017; R$458.6 billion, 14.6% of the total, maturing in 2018; and R$2,485.1 billion, 79.4% of the total, maturing as of January 2019.

At the end of May, the total net exposure in exchange swap operations reached R$88.9 billion. The result of these operations in the period (difference between the yield of the Interbank Deposit (DI) and the exchange variation plus coupon) was unfavorable to the Central Bank by R$0.6 billion.

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

The PSND reached R$3,075.1 billion (48.1% of GDP) in May, growing by 0.7 p.p. of GDP compared with the previous month.

In the year, the PSND/GDP ratio increased by 2 p.p. as a result of incorporation of nominal interest (+2.7 p.p.), accumulated exchange rate appreciation of 0.5% (+0.1 p.p.), the primary deficit (+0.2 p.p.), the effect of nominal GDP growth (-0.9 p.p.), and the parity adjustment of the basket of currencies that compose the net external debt (-0.1 p.p.).

The GGGD (Federal Government, INSS, state and municipal governments) reached R$4,633.5 billion in May (72.5% of GDP), increasing by 1.2 p.p. of GDP compared with the previous month.