MercoPress. South Atlantic News Agency

Brazil's budget primary surplus back on track

Brazil primary surplus was above target in March, 6.2 billion US dollars, thus retaking the first quarter savings drive, reported the country's Central Bank.

President Lula da Silva administration is committed, since the beginning of its mandate in 2003 to maintain a budget primary surplus equivalent to 4.25% of GDP.

In the three first months of 2006 that surplus reached the equivalent of 4.39% of GDP.

The Central Bank report came as a relief to investors since in the first two months of this year, the surplus was down to the equivalent of 2.43% of GDP, below the self imposed target. This was mainly because of additional government expenditure since 2006 is an electoral year and although President Lula da Silva has yet to make the public announcement, the political system and business community are convinced he will run for re-election next October.

The Brazilian government has repeatedly said it is committed to a 4.25% GDP primary surplus and has even proponed Congress that the target is extended for the coming four years until 2009.

In the last twelve months to March, the primary surplus was equivalent to 4.39% of GDP. In 2005, the primary surplus reached 4.84% of GDP.

However this is not enough to service Brazil's foreign debt, which means the real budget surplus in the first quarter of this year, was equivalent to 4.86% of GDP, compared to 2.33% for the same period in 2005. March played a leading role in putting the primary surplus back in track.

In the last twelve months Brazil's real budget deficit was 4% of GDP. In 2005 the nominal deficit was 3.29%.

Brazil's net government debt reached last February 481.6 billion US dollars which is equivalent to 51.7% of GDP.