Brazil's Public Sector Gross Debt Down To 73.1% Of GDP In January

• Brazil's gross debt continued its downward trajectory in January, while the consolidated public sector recorded a strong primary surplus, the central bank showed on Tuesday.
• The government debt as a percentage of gross domestic product fell to 73.1% in January, from 73.4% in December, the lowest level since June 2017, when it reached 72.7%. The reduction was mainly due to the growth of nominal GDP, followed by net debt redemptions, which are affected by positive budget balance figures.
• In January, the Brazilian public sector recorded a primary surplus of 99 billion reais (US$19Mn), surpassing the 90 billion reais surplus expected by economists polled by Reuters. However, the figure was lower than the 101.8 billion reais surplus in the same month last year. The performance was mainly driven by the 79.4 billion reais surplus from the central government, helped by record revenues for the month.

• Despite the positive data, the anticipated outturn for 2022 may show a strong primary deficit, worsened after leftist President Luiz Inacio Lula da Silva secured Congress approval for a multi-billion reais spending package to fulfil campaign promises.
• However, the government has signalled that it will seek to reduce the fiscal shortfall, through the reimposition of taxes on fuels announced by the Finance Ministry on Monday.

(Source: Reuters)