Brazil boosts forecast for 2022 budget surplus forecast to $4 billion

3:01 pm Tuesday, November 22nd, 2022

BRASILIA (Reuters) -Brazil’s government on Tuesday boosted its projection for this year’s fiscal surplus, which will be the first since 2013, thanks to more upward revisions in federal revenues.

The Economy Ministry forecast a 23.4 billion reais ($4.4 billion) primary budget surplus for the central government, comprising Brazil’s Treasury, central bank and Social Security, up from September’s estimate for a 13.5 billion reais surplus.

If confirmed, the result will be further away from the official target of a 170.5 billion reais deficit for 2022.

In its latest bi-monthly revenue and expenditure report, the ministry improved by 11.1 billion reais the outlook for federal net revenues this year, helped mainly by more dividends from state-owned companies.

The state-controlled oil company Petrobras has boosted public coffers with a generous dividend policy, on the back of soaring profits amid higher oil prices.

Despite the better fiscal picture, the government announced in the report the need to freeze an additional 5.7 billion reais in expenses to comply with the constitutional spending cap, which limits public spending growth to the previous year’s inflation.

The ministry also defended the legacy of outgoing President Jair Bolsonaro in controlling public accounts and added that its administration had sent Congress a more favorable revenue calculation for next year, which reduces the projection of the 2023 primary deficit to 40.4 billion reais from 63.5 billion reais before.

The numbers, however, do not include a billionaire expansion of the Auxílio Brasil welfare program, an election promise of both right-wing Bolsonaro and leftist President-elect Luiz Inácio Lula da Silva, who takes office on Jan 1.

Lula’s transition government is currently working on a proposal to amend the Constitution to exempt social spending from the budget cap, which should significantly worsen next year’s budget balance.

($1 = 5.3517 reais)

(Reporting by Marcela Ayres; Editing by David Gregorio)