Brazil's 1999 federal budget has primary surplus
Monday August 31, 5:48 pm Eastern Time
BRASILIA, Aug 31 (Reuters) - A draft version of the
Brazilian federal government's budget for 1999 sees a surplus,
in primary terms, of 8.7 billion reais, or 0.87 percent of gross
domestic product, the Planning Ministry said Monday.
The primary account does not include debt costs.
For 1998, the government has scaled down its expected primary budget surplus in the federal
accounts to 0.48 percent of GDP, Planning Minister Paulo Paiva told reporters.
Previously, the government had forecast a primary surplus equivalent to about 0.8 percent of
GDP.
''The big challenge is to find compatibility between fiscal austerity and the government's
priorities,'' Paiva said.
In operational terms, which includes debt costs, the federal budget in 1999 would run up a
deficit of 1.82 percent of GDP, Paiva said.
That compared with an expected operational deficit of 3.23 percent in 1998, the minister said.
Brazil's poor fiscal performance -- attributed in part the impact of high interest rates on public
debt -- has long worried investors who fear the public sector deficit makes the national currency,
the real, vulnerable to speculative attack.
Brazil's public sector budget deficit -- which includes state and municipal authorities as well as
the federal government -- is estimated to have passed 7 percent of GDP in nominal terms, the
widest scale for measuring public accounts.
Paiva singled out Brazil's loss-making social security systems as a huge drain on public finances.
A system for workers in the private sector, known as the INSS, would post a loss of about 7.04
billion reais in 1999 while the more generous system for the much smaller public sector work
force was expected to go 19.16 billion reais into the red.
The social security shortfall as a whole next year would be equivalent to 2.62 percent of GDP,
more or less unchanged from 2.67 percent in 1998, Paiva said.
The Brazilian government has been trying to get a bill to reform social security rules through
Congress since 1995.
Officials say they will press ahead with the final few votes on the bill after October's elections.
The 1999 federal government budget proposal was due to be sent to Congress where it must be
debated and voted in both houses.
($ equals 1.18 reais)
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