The Treasury says the central government had a primary deficit of R$22.404 billion in August

BRASILIA (Reuters) – The central government recorded a primary deficit of R$22.404 billion in August, compared to a negative balance of R$26.730 billion in the same month last year, the National Treasury said on Thursday (3).

The result, which includes treasury, central bank and social security accounts, last month was in line with the negative balance of 22.4 billion reais that analysts had expected in research conducted by the magazine Reuters.

Treasury data show there was a 6.2% above-inflation increase in net revenues – which excludes transfers to regional governments – compared to the same month in 2023, to R$148.934 billion.

The highlight was the 12.6% above inflation growth in tax collections administered by the Federal Revenue Service, driven mainly by income tax collections, industrial product taxes (IPI) and coffins.

Resources not managed by the IRS saw a real decline of 2.8%, driven by lower earnings and shares.

On the expenditure side, there was a real increase of 2.0%, reaching R$171.338 billion. In this account, increases were observed in spending on Social Security benefits, payroll bonuses, and unemployment insurance.

In the first eight months of the year, the central government accumulated a primary deficit of R$99.997 billion, 9.1% lower than observed in the same period of 2023. In 12 months, the central government’s accounts accumulated a deficit of R$227.5 billion. This is equivalent to 1.98% of the GDP.

The accumulated data is still far from the government’s zero primary deficit target for 2024, the tolerance range of which is 0.25 percentage points of GDP, equivalent to about 29 billion riyals.

In September, the economic team forecast that the central government would close 2024 with a primary deficit of R$28.3 billion, a margin of R$400 million compared to the minimum target.

The August data, usually released in the last week of September, was presented late as Treasury staff mobilized in search of better payroll conditions.