The primary surplus of BRL 13.824 billion in December made the economic team end 2021 in a situation that had not occurred since August 2019. The Central Government – National Treasury, Social Security and Central Bank – reached, last month, a slack of BRL 119 .7 billion in the golden rule, which works as a kind of ceiling for public debt.
Established by Article 167 of the 1988 Constitution, the golden rule determines that the government cannot borrow to finance current expenditures (such as the maintenance of the public machine), but only for capital expenditures (such as investment and amortization of public debt) or to refinance public debt.
In recent years, successive fiscal deficits have jeopardized compliance with the rule, which has led the Treasury to seek sources of funds to have cash on hand and reduce the need to issue government bonds.
With the government collecting more than it spent in December, the primary surplus allowed cash inflows that temporarily reduced the need to issue public bonds. The break, however, will be temporary. With the 2022 Budget forecasting a primary deficit of R$79.3 billion, the Treasury projects a shortfall of R$125.7 billion for the golden rule this year.
These R$ 125.7 billion will need to be approved by the National Congress by an absolute majority, in the form of supplementary credits in the Budget. According to the National Treasury, the money will mainly finance Social Security spending in 2022.
In addition to the record collection, which ensured the entry of public account services, some factors helped to reduce the insufficiency of the golden rule in 2020. One of them was the incorporation of R$ 140 billion of surplus of financial funds to cushion the public debt (financial reserve that covers the maturity of public debt in times of crisis). The return of R$ 62.6 billion from the National Bank for Economic and Social Development (BNDES) to the Treasury was another factor.
