Government accounts have a deficit of R$ 20.6 billion in February, the lowest for the month since 2015

The central government’s accounts – which include the National Treasury, Social Security and the Central Bank – had a deficit of R$ 20.6 billion in the month of February, the National Treasury reported this Wednesday (30).

The negative result shows that the government spent more than it collected last month. Still, it was the smallest deficit for February since 2015, according to data already updated for inflation.

As the government had registered an expressive surplus in the month of January, the accounts remain in the black for the year, with a positive balance of R$ 56 billion.

however, the Ministry of Economy itself predicts that the central government’s accounts will end the year with a deficit of R$ 66.9 billion.

Although negative, the result would be much smaller than that authorized by the LDO (Budget Guidelines Law), which allows for a deficit of up to R$ 170.5 billion.

The reduction in the fiscal gap has been highlighted by members of the economic team as a sign of improvement in the accounts.

“This more favorable scenario for public accounts supports the recent improvement in the country’s financial conditions, at a time of great uncertainty in the geopolitical environment”, says the agency.

The Treasury warns, however, that the continuity of this process depends on the progress of fiscal adjustment measures and the preservation of the spending ceiling – a fiscal anchor that limits the growth of expenses to the variation of inflation and is in the spotlight amid the electoral debate.

In February, significant increases in revenues managed by the Federal Revenue Service and also in non-tax collection (which includes dividends and collections from auction bonuses) helped to reduce the primary deficit.

The government’s net revenue had a real increase (inflation already discounted) of 10.7% compared to February 2021.

On the other hand, expenses had a real growth of 6.5%. One of the explanations, according to the Treasury, is the expansion of the Auxílio Brasil social program, a substitute for Bolsa Família — a hallmark of PT administrations.

Since December 2021, families covered by the program receive an amount of at least R$400 per month. As a result, R$7.4 billion was paid through Auxílio Brasil in February. A year earlier, the Bolsa transferred R$ 2.7 billion to families.

The government has been running deficits since 2014, with spending above its revenue. With the performance of the first two months, the government almost closed the gap in the accounts: in 12 months, the result was negative by R$ 6.7 billion, equivalent to 0.01% of GDP (Gross Domestic Product).

The Ministry of Economy’s forecast for public accounts could still get worse due to the need to include an accounting expense of R$ 23.8 billion, referring to the agreement between the Union and the São Paulo City Hall around Campo de Marte.

The government’s decision to cut taxes such as the IPI (Tax on Industrialized Products) and the PIS/Cofins on diesel also delays the turn of accounts to the blue. The recent exemptions made by the government already drain R$ 49.8 billion in revenue.

Economy Minister Paulo Guedes has already announced a 25% cut in the IPI, whose impact is estimated at 21.1 billion – about half of that subtracted from federal revenue. The PIS/Cofins exemption on diesel, cooking gas and aviation kerosene generates a waiver of BRL 14.9 billion in 2022.

The National Treasury also planned to release its estimate of the government’s gross tax burden in 2021 this Wednesday. The announcement of these data, however, was postponed to April 4 due to the stoppage of the agency’s servers, who ask for salary readjustments.