BRASILIA (Reuters) – Brazil’s central government reported its first primary budget surplus in nine years, driven by record revenues, but which does not pave the way for continued fiscal improvement, Treasury data showed on Friday.
The central government, comprising Brazil’s Treasury, central bank and Social Security, posted a 54.1 billion reais ($10.7 billion) budget surplus before interest payment in 2022. The last positive result was recorded in 2013.
It followed a 4.4 billion reais surplus in December, which came higher than the 2.8 billion reais expected in a Reuters poll.
The performance was widely expected, helped by record tax revenue from a more robust economy and generous dividends from state-run oil company Petrobras, which were boosted by surging commodity prices after the Ukraine war.
In 2022, the Brazilian economy surprised on the upside amid an improved job market, strong resumption of services and government stimulus measures on the eve of a presidential election.
Private economists polled weekly by the central bank expect 2022 GDP to rise 3%, from just 0.3% they had forecast when last year began.
Former President Jair Bolsonaro’s team had been highlighting that the public accounts rebalancement was also due to liberal government reforms that have helped to increase private investment and reduce the unemployment rate.
In any case, the prospect was that the central government would again record a primary deficit this year, worsened after leftist President Luiz Inacio Lula da Silva secured Congress approval, even before taking office in January, for a multibillion reais spending package to meet welfare campaign promises.
Surging expenses led the primary deficit budgeted for 2023 to reach impressive 232 billion reais. The new Finance Minister Fernando Haddad said he would seek to cut it by more than half by boosting revenue and trimming expenditures.
($1 = 5.0783 reais)
(Reporting by Marcela Ayres; Editing by Mark Porter and Steven Grattan)