MercoPress. South Atlantic News Agency

Brazil’s strong growth has budget primary surplus above target

More to come forecasts Treasury Secretary Arno Augustin

The Brazilian central government posted in April its largest monthly primary budget surplus in two years on the back of solid economic growth, reversing two months of negative results, the Treasury said on Wednesday.

The surplus of the central government -- which includes the Treasury, central bank and the national social security system -- rose to 16.6 billion Real (8.9 billion US dollars) in April, the second largest result since Brazil began tracking the data. That compared with a surplus of 10 billion Real a year-earlier.

That brings the balance for the year through April to 24.7 billion Real, the equivalent of 2.3% of GDP and above the government target for the first four months of the year of 18 billion Real.

The jump reflects improved economic activity and the results marked “the start of a new phase” in the government's fiscal policy, said Treasury Secretary Arno Augustin.

Brazil's fiscal accounts struggled last year as the tail-end of an economic recession and tax breaks to key industries weighed on the government's public coffers.

Despite the Euro zone debt crisis, Augustin said Brazil's public sector has a “good chance” of outperforming the fiscal target for the year of 3.3% of GDP.

The central government surplus feeds into the consolidated public-sector primary surplus, which is closely tracked by investors as a measure of Brazil's ability to pay its debts. The consolidated result is due to be released on Thursday.

Brazil's primary budget surplus was equivalent to 2.06% of GDP for 2009, the lowest since the start of that series in 2001, data showed in January.