Economic Information

PRESS RELEASE - June 30, 2015

Fiscal Policy
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I - Fiscal results

The consolidated public sector turned in a primary deficit of R$6.9 billion in May. The Central Government and state-owned enterprises posted respective deficits of R$8.9 billion and R$72 million, and regional governments, a surplus of R$2 billion.

In the year, the cumulative primary surplus reached R$25.5 billion, as compared to a surplus of R$31.5 billion in the same period of 2014. In the 12-month period, a primary deficit of R$38.5 billion (0.68% of GDP) was observed, against a deficit of R$42.6 billion (0.76% of GDP) in April.

Nominal interests appropriated on an accrual basis reached R$52.9 billion in May, as compared to R$2.2 billion in April. This trajectory reflected the unfavorable result of R$22.1 billion with swap exchange operations in the month, as compared to a favorable result of R$31.8 billion in April. Cumulative nominal interests in the year amounted to R$198.9 billion, against R$101.6 billion in the same period of the previous year. In twelve months, nominal interests added up R$408.8 billion (7.22% of GDP), up 0.52 p.p. of GDP when compared to April.

The nominal result, which includes the primary result and nominal interests appropriated on an accrual basis, turned in a deficit of R$59.8 billion in May. In the year, the nominal deficit amounted to R$173.4 billion, compared to a deficit of R$70.1 billion in the same period in 2014. In the 12-month period, the nominal deficit reached R$447.2 billion (7.9% of GDP), 0.45 p.p. of GDP higher than in the previous month.

The nominal deficit observed in May was financed through expansions of R$57.2 billion in the securities debt and R$5.7 billion in other domestic financing sources, including the monetary base, which were partially offset by reductions of R$2.9 billion in the net bank debt and R$330 million in net external financing.

II - Federal securities debt

The domestic federal securities debt outside the Central Bank, evaluated by the portfolio position, amounted to R$2.372 billion (41.9% of GDP) in May, growing by R$38.2 billion when compared to the previous month. This result reflected net issuances of R$13 billion, an increase of R$0.9 billion, due to the currency depreciation, and appropriation of interests, R$24.3 billion.

It should be highlighted net redemptions of R$58.3 billion in National Treasury Notes - series B (NTN-B) and net issuances of R$47 billion in National Treasury Bill (LTN), R$17.5 billion in National Treasury Notes - Series F (NTN-F) and R$7.3 billion in Treasury Financing Bills (LFT).

The participation by indexing factors registered the following evolution when compared to April: the percentage of exchange-indexed securities rose from 0.4% to 0.5%; the percentage of Selic-indexed securities raised from 15.3% to 15.4%, due to net issuances of LFT; the percentage of fixed-rate securities grew from 30.3% to 32%, due to net issuances of LTN; and the percentage of inflation-indexed securities decreased from 27.4% to 25.4%, due to net redemptions of NTN-B. The participation of repurchase operations rose from 26.3% to 26.4%, reflecting net sales of R$10.8 billion.

In May, the maturity structure of the securities debt on the market was as follows: R$236.3 billion, 10% of the total, maturing in 2015; R$338.7 billion, 16.4% of the total, maturing in 2016; and R$1.747 billion, 73.7% of the total, maturing as from January 2017.

At the end of May, the total net exposure in foreign exchange swap operations reached R$356.6 billion. The result of these operations in the period (the difference between DI profitability and the exchange rate variation plus coupon) was unfavorable to the Central Bank by R$22.1 billion.

III - Public sector net debt

Public sector net debt (PSND) reached R$1,903.7 billion in May (33.6% of GDP), dropping by 0.1 pp of GDP when compared to the previous month. The exchange rate devaluation of 6.18% registered in the month accounted for a reduction of R$57.3 billion in the PSND stock.

In the year, the PSND/GDP ratio fell by 0.5 p.p., influenced by the 19.7% cumulative exchange rate devaluation in the period (-2.8 p.p.), the effect of nominal GDP growth (-0.8 p.p.), the primary surplus (-0.5 p.p.), the incorporation of interests (+3.5 p.p.) and the parity adjustment in the basket of currencies that compose of the net external debt (+0.1 p.p.).

The General Government (Federal Government, Social Security National Institute, state and municipal governments) Gross Debt reached R$3,538.7 billion in May (62.5% of GDP), rising by 0.9 p.p. of GDP when compared to the previous month.