Public accounts have a deficit of R$ 50 billion in May, the biggest deficit for the month in three years

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In the first five months of this year, there was a primary surplus of R$ 28.5 billion. Gross public sector debt, closely monitored by investors, rose to 73.6% of GDP in May. Consolidated public sector accounts registered a primary deficit of R$50.2 billion in May, the Central Bank informed this Friday (30). This was the worst result for that month since 2020, amid the Covid-19 pandemic, when the gap in public accounts totaled R$ 131.4 billion. In the same month of last year, a negative balance of R$ 33 billion was recorded. The primary deficit occurs when tax expenditures exceed revenues, disregarding public debt interest. When the opposite happens, there is a deficit. The result encompasses the federal government, states, municipalities and state-owned companies. At the same time, the gross debt of the consolidated public sector, an indicator closely followed by investors as it indicates countries’ ability to pay, rose 0.7 percentage points last month, to 73.6% of GDP (see further down in this report). ). The negative balance of public accounts in the last month was due to the performance of the federal, state, municipal and state government accounts. See below: federal government registered a deficit of R$ 43.2 billion; states and municipalities had a deficit balance of R$ 6.8 billion; state-owned companies had a deficit of R$ 168 million. In the first five months of this year, still according to information from the Central Bank, a primary surplus of R$ 28.53 billion (0.66% of GDP) was recorded. Despite the positive balance, there was a decrease compared to the same period of 2022 – when the surplus amounted to R$ 115.5 billion, equivalent to 2.92% of GDP. After interest expenses When public debt interest is included in the account – in the concept known in the market as a nominal result, used for international comparison – there was a deficit of R$ 119.2 billion in the public sector accounts in May. In 12 months, until May of this year, the result was negative (nominal deficit) at R$ 656.5 billion, equivalent to 6.39% of GDP. This number is closely monitored by risk rating agencies when defining countries’ credit scores, an indicator taken into account by investors. The nominal result of the public sector accounts is impacted by the monthly result of the accounts, the actions of the BC in the exchange rate, and the basic interest rate of the economy (Selic) set by the institution to contain inflation. Currently, Selic is at 13.75% per year, the highest value in six and a half years. According to the BC, last month expenses with nominal interest totaled R$ 69 billion. In the 12 months through May, spending on interest totaled R$695.5 billion (6.77% of GDP). Gross debt The gross debt of the public sector, an indicator that is also monitored by risk rating agencies, registered an increase in May, reaching 73.6% of GDP, equivalent to R$ 7.56 trillion. In April, the debt was at 72.9% of GDP, totaling R$7.45 trillion. Last month, the government announced the new fiscal framework, that is, proposed rules for public accounts to replace the spending ceiling. The National Treasury has already admitted that the debt could exceed 80% of GDP at the end of the Lula government, in 2026. Financial market analysts estimate that the gross debt of the public sector should reach 91.8% of the Gross Domestic Product (GDP) from Brazil in 2032.

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