Public sector accounts: 108 billion rand in 2018 | Economy

This means that public sector spending has exceeded taxes and tax revenues. The account does not include the costs of paying interest on the public debt.

The year 2018 was the fifth followed with the scores in the red. The historical series of the Central Bank began in 2001. In 2016 and 2017, the accounts were negative R $ 155.791 billion (2.49% of GDP) and R $ 110.583 billion (1.69% of GDP). . (19659006) Source: CENTRAL BANK

With the result recorded by public accounts last year, the target for the period was officially achieved. For the entire public sector, the goal was to reach a deficit (spending greater than revenue) of up to R $ 161.3 billion for 2018.

To reach the l? As a budgetary objective, the government was counting on aid from growth. of the economy, which has resulted in increased revenues and cash inflows, a financial contribution that the government receives from companies that explore oil in the country. With regard to royalties only, the government received R21 billion more than in 2017.

It also had resources from the increase in fuel taxation, imposed in July 2017. In 2018 this increase was accounted for throughout the year, whereas the previous year, the increase was only in the last five months of the year. Additional revenue in 2018 was R 8 billion in PIS / Cofins on fuel, according to Federal Income (RF) data.

The deficit was also lower than expected because of the difficulties the government faced in spending its resources. This is due to the excessive link of expenditures with the slower evolution of projects. This phenomenon is called "incorporation", that is to say that they are authorized values ​​but that they have not been spent. Last year alone, there were 7.7 billion rubles of "pockets".

When central government expenditures on public debt interest (known in the market as a nominal result) are incorporated in the account, the public accounts record a deficit of R $ 487.422 billion last year , the equivalent of 7, 9% of GDP.

This value, used in the international comparison, is considered high for emerging economies. The result is closely monitored by the rating agencies for the definition of the country credit rating, an indicator taken into account by investors.

The nominal deficit of the public sector accounts is influenced by the primary deficit of public accounts and by the basic interest rate of the economy (Selic rate), set by the Central Bank to contain l & # 39; inflation. Currently, the Selic is at 6.5% per annum, the lowest value of the historical series.

Nominal interest expense amounted to R $ 379.184 billion in 2018, or 5.52 percent of GDP, according to Central Bank data.

Net Credits and Gross Credits

Net public sector debt (general government, state, municipal and state-owned enterprises) increased from R $ 3,382 billion in December 2017, or 51.6% of GDP, to 3 R $ 595 billion. at the end of last year – equivalent to 53.8% of GDP.

Net debt takes into account the country's badets, such as international reserves – currently in the range of 380 billion US dollars.

In the case of public sector gross debt, one of the main forms of international comparison and which does not take into account the badets of the countries, Brazil's debt rose from 74.1 % of GDP (R $ 4,854 billion) in December 2017.

BRAZILIAN DEBT OF BRAZIL (% OF GDP)

Debt began to increase with greater intensity with the price of the Russian pound (19459003 ) at 5 271 billion rubles at the end of last year, or 76.7% of the gross domestic product. (19659022) The National Treasury recently noted that, according to the International Monetary Fund (IMF), the gross debt of emerging countries, that is, at the "same stage of development" of Brazil, is poor. about 50% of GDP.

Gross debt is an indicator closely monitored by risk badessment agencies – which give country ratings (which function as a recommendation or not for investment).

An upward trend in debt, in a scenario of lack of reforms, could lead to a deterioration of the Brazilian rating – with a recommendation to foreign investors to withdraw resources from the country. According to National Treasury forecasts, the gross debt will continue to increase and will account for 80% of GDP by 2021.

The increase in debt in turn raises doubts about the capacity of the government. Brazil to honor its commitments and reversed, could force the government to pay higher interest rates to investors wishing to buy government bonds.

This increase in interest, due to the deterioration of the accounts, would be pbaded on to businesses and families, thus limiting the growth of the economy and the creation of jobs.

According to the Government, it will be necessary, in order to approve a social security reform, that the accounts come back to blue and that the gross debt ceases to grow. The Temer government put forward a proposal, but Congress did not support it.