February 27, 2020 / 3:12 PM / a month ago

UPDATE 1-Brazil's government posts record January primary budget surplus

(New throughout, adds details, comments from Treasury Secretary)

By Marcela Ayres

BRASILIA, Feb 27 (Reuters) - Brazil’s government finances started the year on the strongest footing since 1997, official figures showed on Thursday, as a solid mix of higher revenues and lower outgoings delivered a surprisingly high budget surplus.

The primary surplus across the Treasury, central bank and social security system, before interest payments are taken into account, totaled 44.1 billion reais ($9.9 billion) in January, the biggest January surplus since comparable records began in 1997.

The figure was much wider than the 38 billion reais surplus median forecast in a Reuters poll of economists, but the Treasury cautioned against too much optimism, even though the government may well meet its 2020 fiscal targets.

“It is very difficult to say for sure that this is a new trend. We have to wait for the next few months,” Treasury Secretary Mansueto Almeida told reporters in Brasilia.

In a note accompanying January’s figures, the Treasury said this year’s primary deficit target of 124.1 billion reais could well be met, although it was too early to say how much smaller it might be.

Almeida also said that consolidating economic growth is crucial to reducing the national debt, and said that budget freezes this year are an option open to the government if its deficit targets come under threat.

The Treasury figures showed that net revenues increased by 6.4% in January to 151.691 billion reais, and total expenses fell 3.3% to 107.567 billion reais.

January’s revenues are traditionally boosted by corporate taxes. Earlier this month, the revenue service said January’s tax take was the highest on record for that month.

The government’s primary deficit last year came in at 95.1 billion reais, well below its goal of 139 billion reais.

Almeida added that the country’s BNDES national development bank still owes the Treasury around 194 billion reais, which should help bolster government revenues this year.

$1 = 4.49 reais Reporting by Marcela Ayres Writing by Jamie McGeever; Editing by David Gregorio

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