MercoPress. South Atlantic News Agency

Brazil’s net debt falls in September to 37.2% of GDP, lowest since 1997

The country holds near record reserves of 353 billion dollars

Brazil’s net debt fell in September to its lowest level since 1997, as a 15% decline in the real last month boosted the value of the country’s near-record 353 billion dollars in foreign currency reserves.

Net debt fell to 37.2% of GDP in September, the central bank said Monday in a report, compared with 39.2% of GDP in August.

Brazil’s primary surplus, which includes federal and local governments as well as state companies, rose to 8.1 billion Reais (4.8 billion dollars) from 4.6 billion Reais in August.

In the minutes to its October policy meeting published last week, the central bank said that a process of “fiscal consolidation” is underway, which will help slow inflation and pave the way for lower interest rates. Consumer prices rose 7.12% in mid-October from a year earlier, exceeding the upper limit of the inflation target for a sixth straight month.

The central bank’s forecast that inflation will slow to 4.5% by the end of 2012 assumes that the government hits its 2011 and 2012 budget targets, the minutes said.

President Dilma Rousseff’s 2012 budget proposal, presented to congress in July, targets a primary budget surplus of 139.8 billion Reais for the federal, state and local governments, the equivalent of 3.1% of GDP. This year the government has already saved 105 billion Reais of its 128 billion Reais primary target.

Brazil’s budget has been boosted by a surge in tax receipts from full employment conditions, and higher taxes on financial transactions. Federal revenue rose 15.4% in September from a year earlier, to 75.1 billion Reais. Revenue raised by the so-called IOF tax on financial transactions rose 25% from a year earlier.

The overall deficit in September was 9.2 billion Reais, or half the previous month’s 17.2 billion Reais.