Difficulties in Achieving the Primary Surplus Target

BRAZIL ECONOMICS - Report 04 May 2015 by Affonso Pastore, Cristina Pinotti and Marcelo Gazzano

In this note we summarize the fiscal result for the first quarter, and based on the Central Government’s accounts, discuss the difficulties in meeting the target of 1.2% of GDP.

With full transparency and without any artifices, in March the Central Government attained a primary surplus of R$ 1.5 billion. This is lower than the figure in March 2014, of R$ 3.2 billion, but that year the government abused accounting tricks and postponed payments until 2015 that should have been made in 2014, which clearly reduced the official surplus. Based on the revised GDP numbers estimated by the IBGE, the accrued primary result in 12 months went from a deficit of 0.4% in February to 0.5% of GDP in March, and based on recurring revenue the deficit remained stable at 1% of GDP (Graph 1).

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