Public accounts have a surplus of R$1.2 billion in March, but debt rises to 75.7% of GDP, the highest level in two years | Economy

The consolidated public sector accounts showed a primary surplus of R$ 1.2 billion in March this year, the Central Bank reported this Monday (6). It was the first positive balance since January.

At the same time, public debt rose to 75.7% of GDP in March (R$8.34 trillion). It is the highest level in two years (see more below).

The primary surplus occurs when tax revenues exceed expenses, disregarding interest on public debt. Otherwise, there is a deficit. The result encompasses the federal government, states, municipalities and state-owned companies.

According to the BC, the March surplus in public accounts was ensured by the performance of state and municipal accountsas the federal government went into the red last month.

• federal government recorded a deficit of R$1.9 billion in March;
• states and municipalities had a surplus balance of R$3.4 billion;
• state-owned companies had a negative balance of R$343 million.

In the first three months of this year, according to the BC, public accounts recorded a surplus of R$54.63 billion, or 2% of GDPagainst a positive result of R$58.4 billion (2.2% of GDP) in the same period last year.

For 2024, the fiscal target, set by the Budgetary Guidelines Law (LDO), is a deficit of up to R$13.31 billion for the accounts of the consolidated public sector (government, states, municipalities and state-owned companies).

The goal is to eliminate the deficit for the federal government’s accounts. However, there is a tolerance range of 0.25 percentage points provided for in the fiscal framework (the new public accounts rule). In other words, there may be a variation of up to R$28.75 billion, up or down, in relation to the objective.

As a result, the public sector can present a negative result of up to R$42.07 billion without the target being formally missed.

Consolidated public sector debt increased by 0.2 percentage points of GDP, rising from 75.5% of GDP in February this year, to 75.7% of GDP in March – equivalent to R$8.34 trillion.

The current level is the highest since April 2022 – when it accounted for 76.3% of GDP. In other words, it is the highest level in around two years.

The rebalancing of public accounts is considered important by the financial market to avoid a spike in Brazilian debt – an indicator that is closely monitored by risk rating agencies.

Gross Debt

% in relation to GDP

Source: Central Bank

According to the BC, debt growth in March is related to interest expenses, the issuance of bonds by the National Treasury in the financial market and the reduction in nominal GDP.

Even with the fiscal framework, the rule for public accounts approved last year, financial market analysts estimated, according to research by the Central Bank, that Brazilian public debt should reach 87.5% of GDP in 2032.

For the government, the debt will rise to 79.7% of GDP in 2027 (base scenario), but there is a possibility that it will reach 90.1% of GDP in 2028 (if the forecasts for public accounts and GDP are worse) . The numbers are in the proposed Budget Guidelines Law (LDO) of 2025, released in April.