Public accounts closed the month of September with a negative balance, mainly due to the federal government deficit, resulting from a 6.2% drop in revenue and an 11.5% increase in expenses compared to September last year. The consolidated public sector – formed by the Union, states, municipalities and state-owned companies – recorded a primary deficit of R$18.071 billion in September, compared to a surplus of R$10.746 billion in September 2022.
The data was released this Wednesday (8) by the Central Bank (BC). The primary deficit represents the negative result of public sector accounts (expenses minus revenues), disregarding interest payments on public debt.
In 12 months – ending in September – the accounts accumulated a primary deficit of R$ 101.888 billion, which corresponds to 0.97% of the Gross Domestic Product (GDP, the sum of all goods and services produced in the country).
In 2022, public accounts closed the year with a primary surplus of R$125.994 billion, 1.27% of GDP.
Spheres of government
In September, the Central Government account (Social Security, Central Bank and National Treasury) had a primary deficit of R$16.506 billion compared to a surplus of R$11.113 billion in September 2022. The amount of the deficit differs from the result released by the National Treasury, of surplus of R$11.55 billion in September because, in addition to considering local governments and state-owned companies, the BC uses a different methodology, which takes into account the variation in the debt of public entities.
The head of the BC Statistics Department, Fernando Rocha, explained that, normally, the results are comparable, but that, in September this year, there was a “statistical discrepancy”. “Between these two statistics, which are consistent with each other, in the month of September, there was a statistical discrepancy of R$28.1 billion [diferença entre o superávit e o déficit]which is highly unusual,” he said, at a virtual press conference to present the results.
According to him, the discrepancy is mainly due to a single operation worth R$26 billion, which took place on September 4th. The amount incorporated into the federal government’s single account, into the Union’s financial assets, refers to resources from PIS/Pasep accounts that were not withdrawn and had been idle for more than 20 years.
“Although the operation is considered in both statistics [do BC e do Tesouro Nacional], they were classified in different ways, with different methodologies. This is the reason for the discrepancy”, said Rocha. While the National Treasury considered the amount as a primary result, the BC only considered the impact on reducing public debt.
He explained that the Transition PEC, approved in December 2022, defined that PIS/Pasep accounts, whose resources have not been claimed for more than 20 years, will be closed and the amounts abandoned. As a result, the resources will be appropriated by the National Treasury.
State governments also recorded a deficit of R$374 million in September, compared to a surplus of R$3.253 billion in September 2022. Municipal governments had a deficit of R$691 million in September this year. In the same month of 2022, there was a deficit of R$2.932 billion for these entities.
In total, regional governments – state and municipal – had a deficit of R$1.065 billion in September 2023 against a positive result of R$321 million in the same month last year.
The worsening, according to the head of the Statistics Department of the Central Bank, is due to a slight reduction, by 1.3%, in revenues from the Tax on the Circulation of Goods and Services (ICMS), the main source of revenue for state governments and municipalities. Transfers from the Union to these entities also reduced by 6%.
Federal, state and municipal state-owned companies – excluding those from the Petrobras and Eletrobras groups – had a primary deficit of R$500 million in September, compared to a deficit of R$688 million in the same month of 2022.
Interest expenses
Interest expenses were R$81.714 billion in September this year, against R$71.364 billion in September 2022.
In this result, there are the effects of the Central Bank’s operations in the foreign exchange market (currency swap, 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 revenue when there are gains and as expenses when there are losses.
In the month of September, the swaps account had losses of R$15.9 billion compared to losses of R$24.7 billion in September 2022.
On the other hand, in the interannual comparison, the fall in inflation helps to reduce interest rates. Also contributing to the evolution of this account is the increase in the debt stock itself and the effect of the basic interest rate, the Selic, rising in the period.
From March 2021 to August 2022, the Central Bank raised the Selic Rate 12 consecutive times, in a cycle of monetary tightening that began amid rising food, energy and fuel prices. For one year, from August last year to August this year, the rate was maintained at 13.75% per year for seven consecutive times. In August of this year, the BC began the reduction cycle and, today, the Selic is at 12.25%.
The nominal result of public accounts – formed by the primary result and interest expenses – increased year-on-year. In September, the nominal deficit was R$99.785 billion against the negative result of R$60.618 billion in the same month of 2022.
In 12 months, the public sector accumulated a deficit of R$801.618 billion, or 7.62% of GDP. The nominal result is taken into account by risk rating agencies when analyzing a country’s debt, an indicator observed by investors.
Public debt
The public sector’s net debt – the balance between the total credits and debts of federal, state and municipal governments – reached R$6.310 trillion in September, which corresponds to 60% of GDP. In August, the percentage of net debt in relation to GDP was 59.8% (R$6.256 trillion).
In September this year, the gross general government debt (DBGG) – which only accounts for the liabilities of federal, state and municipal governments – reached R$7.826 trillion or 74.4%, an increase in relation to the previous month (R$ 7.771 trillion or 74.3% of GDP). Just like the nominal result, gross debt is used to draw international comparisons.
