Public accounts have a deficit of R$ 14.182 billion in March

Public accounts closed the month of March with a negative balance, mainly as a result of the drop in municipal, state and federal government revenues. The consolidated public sector – made up of the Union, states, municipalities and state-owned companies – registered a primary deficit of BRL 14.182 billion last month, compared to a primary surplus of BRL 4.312 billion in March 2022.

The data were disclosed, in Brasília, this Friday (28), by the Central Bank (BC). The primary deficit represents the negative result of public sector accounts (expenses minus revenues), disregarding the payment of interest on the public debt.

According to the head of the BC’s Department of Statistics, Fernando Rocha, the drop in revenue from regional governments was the main factor responsible for the reduction in the primary result in the interannual comparison, by R$ 16.5 billion. The federal government contributed BRL 1.9 billion to the decline between March 2022 and March 2023.

In 12 months, ending in March, the accounts accumulated a primary surplus of R$ 74.755 billion, which corresponds to 0.74% of the Gross Domestic Product (GDP, sum of all goods and services produced in the country).

For Rocha, considering the result in 12 months, there was a peak in the primary surplus in August last year, when it reached R$ 230.6 billion (2.44% of GDP). Since then, this positive result has been falling in the accumulated in 12 months.

In 2022, public accounts ended the year with a primary surplus of BRL 125.994 billion, 1.28% of GDP.

isolated data

Last month, the Central Government (Social Security, Central Bank and National Treasury) presented a primary deficit of BRL 9.712 billion compared to the deficit of BRL 7.811 billion in March 2022. The Union’s net revenue fell due to exemptions granted by the last government and social program spending on the rise.

The amount of the Central Government deficit differs from the result released yesterday (27) by the National Treasury, of a deficit of R$ 7.085 billion in March, because, in addition to considering local and state governments, the BC uses a different methodology, which takes taking into account the variation in the debt of public entities.

State governments also had a deficit last month, of BRL 2.075 billion, compared to a surplus of BRL 8.408 billion in March 2022. Municipal governments, on the other hand, noted a deficit of BRL 2.550 billion in March of this year. In the same month of 2022, there was a surplus of BRL 3.473 billion for these entities.

In total, regional governments (state and municipal) had a deficit of BRL 4.625 billion in March 2022 against a positive result of BRL 11.882 billion in the same month of 2022. The drop can be explained by the 14.4% reduction in revenues with the Tax on the Circulation of Goods and Services (ICMS), the main source of revenue for these entities. There was also a 2.6% reduction in regular transfers from the federal government within the scope of tax sharing and other federal norms, a natural result of the fall in federal revenue.

Federal, state and municipal state companies, excluding those of the Petrobras and Eletrobras groups, had a primary surplus of R$ 154 million last month.

interest expense

Interest expenses stood at BRL 65.317 billion last month, against BRL 64.153 billion in February and BRL 30.784 billion in March 2022.

In this increase, there are the effects of Central Bank operations in the exchange market (swap exchange rate, which is the sale of dollars in the futures market), which, in this case, contributed to the worsening of the interest account in the annual comparison. The results of these operations are transferred to the payment of interest on the public debt, as income when there are gains and as expenses when there are losses.

Last month, the swap account had gains of BRL 11.7 billion, against gains of BRL 40.3 billion in March 2022.

In the interannual comparison, the increase in the debt stock and the increase in the Selic rate in the period also contributed to the evolution of interest rates, which rose from 11.75% per annum in March of last year to the current 13.75% per annum.

The nominal result – formed by the primary result and interest expenses – also increased in the interannual comparison. In March, the nominal deficit was BRL 79.499 billion, against the positive result of BRL 26.472 billion in the same month of 2022.

In 12 months, the public sector accumulates a deficit of R$ 618.890 billion, or 6.11% of GDP. The nominal result is taken into account by risk rating agencies when analyzing a country’s indebtedness, an indicator observed by investors.

Public debt

The public sector net debt (balance between the total credits and debts of the federal, state and municipal governments) reached R$ 5.788 trillion in March, which corresponds to 57.2% of GDP. In February, the percentage of net debt in relation to GDP was 56.6%.

In March of this year, the gross debt of the general government (DBGG) – which only accounts for the liabilities of federal, state and municipal governments – reached R$ 7.398 trillion or 73% of GDP, against R$ 7.351 trillion (73% of GDP ) in the previous month. Like the nominal result, gross debt is used to draw international comparisons.