By Alonso Soto
BRASILIA Dec 27 Brazil posted its largest ever primary budget surplus for November thanks to a stream of extraordinary revenues, but the hefty result is unlikely to be enough for the government to reach its year-end target.
Brazil on Friday reported a consolidated primary budget surplus of 29.745 billion reais ($12.64 billion) last month, more than quadruple the October surplus of 6.188 billion reais. The surplus, which excludes debt servicing costs, was the biggest for the month of November since the government began tracking the data more than a decade ago.
President Dilma Rousseff is relying heavily on billions of dollars in extraordinary revenues from corporate tax settlements and an oil-rights auction to make up for weak fiscal results, a situation that has worried investors and raised the specter of a credit downgrade next year.
In the 12 months to November, the country's primary surplus was equivalent to 2.17 percent of gross domestic product, below the government's original goal of 2.3 percent of GDP. The primary surplus is the excess of revenue over expenditure before payments on debt are made.
The government has repeatedly lowered its annual target this year as a slew of tax breaks and more public spending have reduced the primary savings and put pressure on the central bank to raise interest rates to contain inflation.
Rousseff has promised to rein in spending next year and maintain the fiscal discipline that helped stabilize Brazil, Latin America's largest economy, after a flurry of crises in the 1980s and 1990s.
Treasury chief Arno Augustin told reporters on Friday that he expects states and municipalities to help bolster Brazil's fiscal position next year. He said a gradual recovery of the economy should lead to more tax income and improve fiscal results in 2014.
He added that the Rousseff administration will aim for a primary surplus goal in 2014 that keeps the debt burden on a downward trend, as it has in previous years.
"We will maintain that trend," Augustin said in a press briefing. "We will build a 2014 with strong economic fundamentals."
The country's net debt fell to 33.9 percent of GDP in November from 34.9 percent in October, central bank data showed. A decade ago Brazil had a net debt of more than 60 percent of GDP.
For 2013 through November, Brazil has a consolidated primary surplus of 80.899 billion reais. Its year-end target is 111 billions reais, meaning that it would need to save 30 billion reais in December to end the year on target.
The government is expected to announce next year's public sector primary surplus target in January or February.
Rousseff will likely announce a goal of around 2 percent of GDP next year in an attempt to ease market worries and allow the central bank to halt its aggressive monetary tightening cycle, government officials have told Reuters.
Last year the Rousseff administration missed its primary surplus goal.
Augustin added that it is very likely the government will issue debt abroad due to an improvement in Brazil's economic fundamentals and more clarity on the future path of U.S. monetary policy.