Brazil’s government forecasts a primary surplus for 2022 of .6 billion, for the first time in nine years

Brazil’s government forecasts a primary surplus for 2022 of $2.6 billion, for the first time in nine years

BRASILIA (Reuters) – The Brazilian government estimated on Thursday that it will post a primary surplus this year, its first since 2013, with public accounts benefiting from booming tax revenues and huge dividends from state-owned companies.

The Economy Ministry expected a primary budget surplus of 13.548 billion reais ($2.63 billion) for the central government, including the Brazilian Treasury, the Central Bank and Social Security, Reuters reported on Wednesday.

The figure contrasts sharply with the initial deficit of 59.354 billion riyals in July and the target official deficit of 170.5 billion riyals for 2022.

Compared to the calculations made just two months ago, the government improved the estimated net revenue for the year by 69.9 billion riyals, anticipating stronger tax collection and an additional 25.6 billion riyals in profits.

The dividend was paid mainly by the state-owned oil company Petrobras, which saw its profits soar as oil prices soared after the Ukraine war.

Economy Minister Paulo Guedes has argued that improving revenues responds not only to higher commodity prices but also to reforms implemented by the government, which have lowered the unemployment rate and attracted more private investment.

The government also announced in the report the need to freeze an additional 2.6 billion riyals in expenditures to comply with the constitutional spending ceiling.

Details of the cuts will be formalized at the end of the month, adding to the pressure on President Jair Bolsonaro, who is delaying the campaign trail for his left-wing challenger Luis Inacio Lula da Silva ahead of the October 2 vote.

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(1 dollar = 5.1437 riyals)

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