Economic Information

PRESS RELEASE - March 28, 2014

Fiscal Policy
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I - Fiscal results

In February, the primary surplus of the consolidated public sector reached R$2.1 billion. The Central Government posted a primary deficit of R$3.4 billion, while regional governments and state-owned enterprises registered respective surpluses of R$5.5 billion and R$52 million.

For the year as a whole, the accumulated surplus came to a level of R$22.1 billion. When cumulative 12-month flows are considered, the primary surplus reached R$86.1 billion (1.76% of GDP), compared to R$81 billion (1.66%) of GDP in January.

In the month under analysis, nominal interests appropriated on an accrual basis reached R$11.6 billion, against R$30.4 billion in January. Among the factors that contributed to this reduction, it should be highlighted the lesser number of business days in February and the positive result of exchange swap operations, which totaled R$8.3 billion in the month, as compared to the negative January result of R$3.9 billion. In cumulative terms for the year, interests reached R$42 billion, compared to R$42.9 billion in the same period of 2013. Over 12 months, nominal interests totaled R$248 billion (5.06% of GDP), a decline of 0.21 p.p. of GDP when compared to the January result.

The nominal result, which includes the primary surplus and appropriated nominal interests, registered a deficit of R$9.5 billion in February and R$20 billion in the first two months of the year. In cumulative 12-month terms, the nominal deficit reached R$161.9 billion (3.30% of GDP), against R$175.6 billion (3.61% of GDP) in the previous month.

In the month under analysis, it should be highlighted expansion of R$20.7 billion in the net banking debt and R$1.6 billion in other internal sources of financing, including the monetary base, partially offset by reductions of R$11 billion in the securities debt and R$1.8 billion in net external financing.

II - Federal securities debt

Evaluated according to the portfolio position, the federal securities debt outside the Central Bank totaled R$1,974.8 billion (40.3% of GDP) in the month of February, with growth of R$24.8 billion when compared to the previous month. This result reflected net issuances of R$7.6 billion, a decline of R$0.5 billion due to exchange appreciation, and incorporation of R$17.6 billion in interest.

Among the operations that deserve mention are net redemptions of R$9.6 billion in NTN-B; R$1 billion in net issuances of NTN-F, with R$7.7 billion in LFT and R$8.9 billion in LTN.

The participation by indexing factors showed the following evolution when compared to the month of January: the percentage of exchange-indexed bonds dropped from 0.5% to 0.4%; the percentage of Selic-indexed bonds increased from 15.5% to 16%, due to LFT issuances; the participation of fixed-rate bonds increased from 29.8% to 30.5%, as a result of net LTN issuances; while the participation of inflation-indexed bonds remained at 28.5%. The participation of repo operations dropped from 25.4% to a level of 24.1%, with net purchases of R$41.9 billion.

In the month under analysis, the maturity structure of the securities debt on the market was as follows: R$345.9 billion, 17.5% of the total, maturing in 2014; R$349.9 billion, 17.7% of the total, maturing in 2015; and R$1,279 billion, 64.8% of the total, maturing as of January 2016.

Net exposure in exchange swap operations totaled R$194.2 billion. The result of these operations (difference between the ID yield and the exchange variation plus coupon) closed at R$8.3 billion favorable to the Central Bank.

III - Public sector net debt

The public sector net debt (PSND) reached R$1,649.5 billion in February (33.7% of GDP), reflecting an increase of 0.5 p.p. of GDP compared to the previous month. One factor that contributed to this rise was 3.8% exchange valuation in the month, posting an impact equivalent to 0.6 p.p. of GDP.

In the year, the PSND/GDP ratio rose by 0.05 p.p. The primary surplus and the nominal GDP growth contributed to reduce the ratio with 0.5 p.p. and 0.4 p.p. of GDP, respectively. In the opposite sense, nominal interest appropriated and 0.4% cumulative exchange valuation in the year contributed to raise the ratio by 0.9 p.p. and 0.1 p.p. of GDP, in that order.

The Gross General Government Debt (Federal Government, INSS, state governments and municipal governments) reached R$2,816.7 billion in February, 57.5% of GDP, a drop of 0.6 p.p. of GDP when compared to the previous month.