After eight years with negative results, the Central Government – National Treasury, Social Security and Central Bank – ended 2022 with a primary surplus of BRL 54.086 billion. The figures were disclosed today (27) by the National Treasury.
The result was driven by record revenues, which rose with the growth of the economy and revenues from oil royalties, which increased in value with the war between Russia and Ukraine. The postponement of expenses also contributed, such as the installment payment of large-value writs that were in effect last year and the low budget execution of several government programs.
The primary surplus represents the difference between government revenues and expenditures without considering the payment of interest on the public debt. In nominal values, this is the best result for public accounts since 2013, when the Central Government had registered a primary surplus of R$72.159 billion. From 2014 to 2021, public accounts recorded consecutive annual deficits.
The result was better than expected by the economic team. At the end of December, the former Special Secretariat for the Treasury and Budget of the Ministry of Economy announced that it expected the primary surplus to end the last year at BRL 34.14 billion.
The primary surplus was not greater only because of the agreement that extinguished the debt of approximately R$ 24 billion of the city of São Paulo with the Union in exchange for the extinction of the lawsuit that questions the control of the airport of São Paulo. Field of Mars in the capital of São Paulo. Had it not been for the agreement, the Central Government would have obtained a primary surplus of R$78 billion in 2022, according to the Treasury.
December
In December alone, the government recorded a primary surplus of R$4.427 billion. The result represents a drop of 69.7% compared to December 2021, discounting official inflation by the Extended National Consumer Price Index (IPCA).
Despite the retreat, the December surplus was higher than expected by financial institutions. According to the Prisma Fiscal survey, released every month by the Ministry of Economy, market analysts expected a positive result of R$ 3.4 billion last month.
Revenues
In 2022, revenues grew more than expenses. Last year, net revenues grew by 17.5% compared to 2021 in nominal terms. Discounting inflation by the Extended National Consumer Price Index (IPCA), growth reached 7.7%. In the same period, total expenses rose 11.6% in nominal terms and 2.1% after discounting inflation.
Regarding the payment of taxes, there was an increase of R$ 102.4 billion (+17.8%) above inflation in the Income Tax in 2022, mainly driven by the increase in corporate profits. In large part, this increase reflects the increase in profits of energy and oil companies, which helped to partially offset the exemptions for industry (-R$ 18 billion) and for fuels.
With the rise in price of oil on the international market, revenues from royalties grew by R$30.4 billion (+29.1%) above inflation last year compared to 2021. Currently, the international barrel price is around US $80 because of the war between Russia and Ukraine, but reached $130 in the first months of the conflict.
Expenses
On the expenses side, there was a drop of BRL 82.2 billion with extraordinary credits in 2022, mainly expenses associated with combating the covid-19 pandemic. However, this decline was offset by the increase in other expenses.
Spending on social programs rose after the constitutional amendment that increased the value of the Auxílio Brasil and created the Taxi Driver and Truck Driver benefits. The increase in the value of the benefit to R$ 400 in the first half and to R$ 600 in the second half increased expenses by R$ 61.7 billion above last year’s inflation.
On the other hand, spending on federal civil service fell 6.1% in 2022 after discounting inflation. The drop reflects the salary freeze for civil servants that was in effect between July 2020 and December 2021 and the lack of readjustments in 2022.
Regarding investments (public works and purchase of equipment), the federal government invested BRL 45.558 billion last year. The value represents a drop of 26.7%, discounting the IPCA, compared to 2021.
