Treasury: Central government has a deficit of R$ 45 billion in May – 06/29/2023 – Market

The central government registered a primary deficit of BRL 45 billion in May, the biggest monthly deficit of the year and the worst result for the month since 2020, showed data released by the National Treasury this Thursday (29).

The numbers mainly reflected an increase in expenses, and the Treasury pointed out some obstacles to the increase in revenues for the rest of the year, although it stressed that the projected results are in line with the plan.

The deficit in May was greater than the negative balance of BRL 39.318 billion recorded in the same month last year, but was below the forecast by analysts in a Reuters survey, of BRL 47.9 billion.

In the month, net revenues, already discounted transfers to states and municipalities, had a real increase of 14.3% over May last year, to R$ 144.9 billion. Total expenses increased by 13.3%, to R$ 190 billion, mainly due to the increase in expenses with Bolsa Família, which underwent readjustments, and the payment of precatories, with a change in the disbursement schedule.

In the year, the accounts of the National Treasury, Central Bank and Social Security now have a surplus of R$ 2.153 billion. In 12 months until May, the balance is positive by R$ 16.6 billion. In data corrected for inflation, the surplus corresponds to 0.18% of GDP.

The secretary of the National Treasury, Rogério Ceron, highlighted in a press interview that factors such as the appreciation of the real and the non-approval of the Carf provisional measure in Congress tend to negatively affect revenues, but he still said he believes that this year’s deficit will remain below 1% of GDP.

The 2023 Budget estimates a fiscal deficit of BRL 238 billion for the year, but the government has said that the objective is to reduce the gap to less than BRL 100 billion, or 1% of GDP.

“Whatever is possible to go beyond that will be sought, without a doubt, but it is within what we planned and is very satisfactory”, Ceron told journalists, when commenting on the data.

According to the secretary, the appreciation of the real is positive for the economy and welcome, but affects the collection of items such as oil royalties and imports.

Carf’s MP gave the government more power to tie decisions on tax inquiries made by companies with the council responsible for deliberating on resources in the area, but the measure lost its validity without a vote in Congress in a timely manner.

“This project of lack of definition harms the process of recovering credits in tax litigation that are awaiting judgment”, said Ceron. “That has some effect for 2023, so it’s going to be difficult to stay much below 1%, but still staying around 1%, a little bit below that.”