February 27, 2019 / 7:43 PM / 6 months ago

UPDATE 1-Brazil's central government surplus narrows in January

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By Jamie McGeever

BRASILIA, Feb 27 (Reuters) - Brazil’s central government posted a primary surplus of 30.24 billion reais ($7.7 billion) in January, the Treasury said on Wednesday, more than expected but down slightly from a year ago, underscoring the heavy strain on Brazil’s public finances.

The central government, which includes federal ministries, the social security system and the central bank, has run an annual deficit for the last five years, the worst run on record.

In the year to January the primary deficit widened 8.4 percent to 120.83 billion reais in nominal terms, the second-widest on record for that 12-month period, Treasury figures showed.

Social security spending was again the biggest drag on the government’s accounts. The social security shortfall was 13.8 billion reais in January, while the Treasury and central bank posted a combined surplus of 44.0 billion reais.

Mansueto Almeida, secretary of the Treasury, noted that the surplus in January was seasonal and will not be repeated as the year progresses.

“The social security deficit continues to put the figures into the red,” he told reporters.

President Jair Bolsonaro has made reining in public spending, particularly social security outlays, a key plank of his economic reform agenda. His draft pension reform bill calls for an increase in the minimum retirement age and aims to save over 1 trillion reais over the next decade.

The accumulated pension deficit in January over the preceding 12 months was 288.8 billion reais, and the Treasury projects that overall shortfall to grow to 309.4 billion by the end of the year.

In calendar year 2018, that deficit widened by 7 percent from 2017 to 195.2 billion reais.

January’s primary surplus was higher than the 25 billion reais forecast in a Reuters poll of economists, but 2.0 percent smaller than the 30.84 billion surplus in the same month last year. Adjusted for inflation, it shrank by 5.5 percent. (Reporting by Jamie McGeever Editing by Brad Haynes and Dan Grebler)

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