BRASILIA (Reuters) -Brazil’s central government posted a smaller-than-expected March primary budget surplus, Treasury data showed on Tuesday, but still delivered a strong first-quarter result, helped by the postponement of court-ordered payments.
Treasury Secretary Rogerio Ceron said at a press conference that the postponement of court-ordered payments was aimed at avoiding fiscal expansion in the first quarter and adding pressure on economic activity at this time to support the central bank’s drive to cool inflation by slowing the economy.
The country’s primary budget surplus reached 1.1 billion reais ($195 million) in March, below the 1.3 billion reais forecast by economists polled by Reuters.
Despite the miss, the result reversed the 1 billion reais deficit recorded in the same month last year.
In the first quarter, the primary surplus reached 54.5 billion reais, more than double the 20.2 billion reais surplus posted in the same period of 2024.
The stronger year-on-year performance was largely driven by a calendar effect, as court-ordered payments fell by 31 billion reais due to a later payment schedule this year.
According to Ceron, about 70 billion reais in court-ordered decisions that the government lost will be paid in July.
Last year, the bulk of these payments were in February.
Over the 12-month period through March, the primary deficit stood at 10.9 billion reais, or 0.07% of gross domestic product (GDP), broadly in line with President Luiz Inacio Lula da Silva’s target of a balanced primary result this year, with a tolerance margin of 0.25% of GDP.
Following the discovery of a corruption scheme involving billions of reais in illegal deductions from social security pensions, Ceron said the Treasury is not currently being asked to reimburse the affected amounts.
Ceron also acknowledged that measures approved by Congress last year failed to offset costly payroll tax exemptions as intended, and said the government is now awaiting legal clarity on how to proceed with the compensation.
($1 = 5.6284 reais)
(Reporting by Marcela Ayres; Editing by Gabriel Araujo, Chizu Nomiyama and Mark Porter)
