Economic Information

PRESS RELEASE - July 29, 2016

Fiscal Policy
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I - Fiscal results

The consolidated public sector registered a primary deficit of R$10.1 billion in June. The Central Government posted a primary deficit of R$10.5 billion, while regional governments and state-owned companies turned in respective primary surpluses of R$98 million and R$291 million.

In the year, the cumulative primary result reached a deficit of R$23.8 billion, against a surplus of R$16.2 billion in the same period in 2015. In the 12-month period, a primary deficit of R$151.2 billion (2.51% of GDP) was recorded, remaining stable, as a proportion of GDP, in comparison with the previous month.

Nominal interests, appropriated on an accrual basis, reached R$22.1 billion in June, compared with R$42.5 billion in May. This reduction was consequent upon gains of R$22.7 billion with foreign exchange swap operations in the month, compared with a loss of R$3.1 billion in the previous month. Cumulative nominal interests in the year amounted to R$173.3 billion, compared with R$225.9 billion in the first half of the previous year. In twelve months, nominal interests added up R$449.2 billion (7.45% of GDP), falling by 0.12 p.p. of GDP as compared with the result from May.

The nominal result, which includes the primary result and nominal interests appropriated on an accrual basis, posted a deficit of R$32.2 billion in June. In the year, the nominal deficit totaled R$197.1 billion, compared with a deficit of R$209.6 billion in the same period of the previous year. In the 12-month period up to June, the nominal result posted a deficit of R$600.5 billion (9.96% of GDP), falling by 0.12 p.p. of GDP when compared with the May's result.

The nominal deficit observed in the month was financed through expansions of R$38.6 billion in the securities debt and R$3 billion in the net bank debt, partially offset by reductions of R$7.5 billion in other domestic financing sources, including the monetary base, and R$2 billion in net external financing.


II - Federal securities debt

The domestic federal securities debt, outside the Central Bank, evaluated by the portfolio position, totaled R$2,837.9 billion (47.1% of GDP) in June, increasing by R$93.7 billion when compared with the previous month. This result reflected net issuances of R$62.4 billion, a decline of R$1.8 billion due to exchange rate appreciation, and incorporation of interests, R$32.9 billion.

Items worth highlighting were the issuances of R$40 billion in LTN, R$6.6 billion in NTN-F, R$6.1 billion in NTN-B, R$5.4 billion in LFT and R$4 billion in securitized credits.

The participation by indexing factors registered the following evolution in relation to May: the percentage of exchange-indexed securities remained stable at 0.4%; Selic-indexed securities rose from 19.6% to 19.8%; fixed-rate securities rose from 26.9% to 28.1%, due to net issuances of LTN and NTN-F; and inflation-indexed securities increased from 26.1% to 26.4%. The participation of repo operations fell from 26.7% to 25.1%, showing net purchases of R$64.6 billion.

In June, the maturity structure of the securities debt on the market was as follows: R$278.4 billion, 9.8% of the total, maturing in 2016; R$363.8 billion, 12.8% of the total, maturing in 2017; and R$2,195.7 billion, 77.4% of the total, maturing as of January 2018.

At the end of June, the total net exposure in exchange swap operations reached R$195.2 billion. The result of these operations in the period (difference between the yield of the Interbank Deposit and the exchange variation plus coupon) was favorable to the Central Bank by R$22.7 billion.


III - Public sector net debt

The public sector net debt (PSND) reached R$2,529.7 billion (42% of GDP) in June, rising 2.3 p.p. of GDP compared with the previous month. The exchange rate appreciation of 10.7% recorded in the month contributed to raise the net debt by R$118.8 billion during the period (2 p.p. of GDP).

In the year, the PSND/GDP ratio increased by 5.8 p.p., consequent upon the exchange rate appreciation of 17.8% (+3.5 p.p.), the incorporation of interests (+2.9 p.p.), the primary deficit (0.4 p.p.), the effect of nominal GDP growth (-0.7 p.p.), and the parity adjustment of the basket of currencies that compose the net external debt (-0.3 p.p.).

The gross debt of the General Government (Federal Government, INSS, state and municipal governments) reached R$4,130.8 billion in June (68.5% of GDP), remaining practically stable, as a percentage of GDP, in comparison with the previous month.