BRASILIA (Reuters) – Brazil’s gross debt continued its downward trajectory in January, while the consolidated public sector recorded a strong primary surplus, showed central bank data on Tuesday.
The government debt as a percentage of gross domestic product fell to 73.1% in January, from 73.4% in December, the lowest level since June 2017, when it reached 72.7%.
The reduction was mainly due to the growth of nominal GDP, followed by net debt redemptions, which are affected by posite budget balance figures. The Treasury will release its monthly debt result later today.
In January, the Brazilian public sector recorded a primary surplus of 99 billion reais ($19 billion), surpassing the 90 billion reais surplus expected by economists polled by Reuters.
However, the figure was lower than the 101.8 billion reais surplus in the same month last year.
The performance was mainly driven by the 79.4 billion reais surplus from the central government, helped by record revenues for the month.
States and municipalities recorded a primary surplus of 21.8 billion reais, while state-owned companies had a deficit of 2.2 billion reais, said the central bank.
Despite the positive data, the outlook for 2022 is for a strong primary deficit, worsened after leftist President Luiz Inacio Lula da Silva secured Congress approval for a multi-billion reais spending package to fulfill campaign promises.
The government has signaled that it will seek to reduce the fiscal shortfall, including through the re-imposition of taxes on fuels announced by the Finance Ministry on Monday.
($1 = 5.2295 reais)
(Reporting by Marcela Ayres; Editing by Andrew Heavens and Steven Grattan)
