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Central Government posts surplus of R $ 6.5 billion in April

Public Accounts

Treasury Secretary warns that social security deficit cancels out any fiscal effort and reinforces need for reform

The Central Government - which includes National Treasury, Central Bank and Social Security accounts - recorded a primary surplus of R $ 6.5 billion in April. In the same month of last year, the result was a surplus of R $ 8.7 billion. The primary surplus is the positive result the public accounts disregarding the payment of interest on the public debt.

In the year to date, the primary deficit reached R $ 2.6 billion, 40% lower in real terms, compared to the same period in 2018 (deficit of R $ 4.3 billion). The figures were released by the National Treasury on Wednesday (29). In the last 12 months, the Central Government registered a deficit of R $ 121.8 billion (1.7% of GDP). The target for 2019 is a primary deficit of R $ 139 billion, which represents around 1.92% of GDP.

In addition, from January to April this year, National Treasury and Central Bank accounts surpassed R $ 63.1 billion, while Social Security (RGPS) remained a deficit of R $ 65.7 billion.

Commenting on the outcome during a press conference, National Treasury Secretary Mansueto Almeida pointed out that, faced with the increase in compulsory expenditure, the National Treasury effort has focused on reducing discretionary spending, impacting on falling public investment. we can not change the dynamics of compulsory expenditure this means that every year you will cut even more public investment, which this year is heading to be around 0.5% of GDP, "he warned.

Revenue and expenses

In April, the government's net revenue reached R $ 124.6 billion, which contributed to public sector revenue reaching R $ 441.3 billion in the first four months of the year, a real decrease of 1.6% in the compared to the same period of the previous year.

In terms of expenses, they totaled R $ 118.1 billion in April, reaching R $ 444 billion in the accumulated amount of 2019, a 0.5% increase in the variation from 2018 to 2019.

The current amount of remnants (RAP) already paid by the government up to April 2019 reached R $ 87.8 billion, against R $ 57 billion in the first four months of 2018. The current inventory still to be paid amounts to R $ 81.4 billion.

Social Security

In the accumulated amount of the last 12 months up to April of this year, the social security deficit of RGPS, RPPS of civilians, pensions, inactive and military reached R $ 297 billion. According to the projections of the National Treasury, at the end of 2019, the Union's social security deficit will reach R $ 314, 6 billion or 4.4% of GDP.

Mansueto reinforced the need for approval of the pension reform to change the dynamics of compulsory spending. "It is very clear that the size of the social security deficit nullifies any fiscal effort outside Social Security," he said.  

With or without DRU, security registers deficit

During the press conference, Mansueto also presented the Summary Report on Budget Execution (RREO) - which tracks the minimum spending on health and education and all income from social security, including social security income and expenses.

From January to April, the Social Security budget registered a deficit of R $ 78.2 billion, while unrelated revenues (DRU) reached R $ 38.24 billion.

The DRU is the mechanism that allows the federal government to freely use a percentage of federal taxes levied by law for a particular purpose, such as social security funding.

The numbers, according to Mansueto, expose the fragility of the argument that if there were no DRU the social security budget would be a surplus. As he pointed out, even without the DRU, the result of the security budget would have been a deficit of R $ 40 billion from January to April.

Consolidated Net Debt

The secretary also presented the Fiscal Management Report (RGF) , which brings the Union's net consolidated debt (DCL) and monitors the constitutional limits for personnel expenses and for credit operations.

According to the report, the ratio between the net consolidated debt of the Union and net current revenue (LCR) is 405% (4.1 times), which, for Mansueto, shows the high level of indebtedness of the Union.

According to the secretary, according to the methodology used by the International Monetary Fund (IMF), the gross debt of most emerging countries reaches about 50% of GDP, while the Brazilian debt reaches around 80%.