Brazil’s April budget surplus before interest payments fell from a year earlier, as the central government saved less amid a faltering economic recovery.
Federal and local governments, including state companies, had a primary surplus in April of 14.2 billion reais ($7 billion), down from 18.1 billion reais a year earlier, the central bank said today in a report distributed in Brasilia. Analysts expected a surplus of 16.3 billion reais, according to the median estimate of 14 economists surveyed by Bloomberg. The April number was up from 10.4 billion in March.
President Dilma Rousseff’s government targets a primary surplus of 139.8 billion reais this year, or 3.1 percent of gross domestic product. The government has cut taxes and boosted lending to the state development bank in an effort to spur an economy that is recovering more slowly than expected from last year’s third-quarter contraction, said central bank President Alexandre Tombini.
Yesterday Brazil cut its benchmark interest rate to a record low 8.5 percent and signaled it will lower borrowing costs further as a fragile world economy contains inflation risks. Analysts lowered for a third consecutive week their growth forecast for this year and now expect the world’s biggest emerging market after China to grow 2.99 percent, according to a central bank survey published May 28.
The government faces pressure to accelerate spending on public works projects, such as stadiums and airports, to help prepare the country for the 2014 soccer World Cup and the 2016 Olympic Games.
After interest payments, the budget had a deficit of 3 billion reais in March. Net debt fell to 35.7 percent of gross domestic product from 36.6 percent in March, the central bank said.
The yield on interest rate future contracts maturing in January 2013, the most traded in Sao Paulo today, fell nine basis points, or 0.09 percentage point, to 7.88 percent at 10:59 a.m. local time. The real weakened 0.5 percent to 2.0258 per U.S. dollar.
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