Public Finances: Government's Gross Fixed Capital Formation decreases by 13.3% in 2017
May 08, 2019 10h00 AM | Last Updated: May 09, 2019 09h26 AM
Gross Fixed Capital Formation, measured by the Intermediate Government Account fell from R$ 92.7 billion, in 2016, to R$ 80.3 billion in 2017 (-13.3%). According to Public Finances Statistics, net borrowing reached R$ 551.3 billion. That figure corresponded to 8.4% of the country's Gross Domestic Product that year. Against 2016, there was an increase by 1.2 percentage points of GDP in thatnet borrowing figure. These are some of the data presented by Public Finances Statistics and Intermediate Government Account 2017, developed by the IBGE in partenrship with the National Treasury Secretariat (STN) and the Central Bank of Brazil. The complete publication is availabe on the right of the page.
In 2017, General Government Net Borrowing (which refers to the finances of municipal, state and federal administrations) hit R$ 551.3 billlion, which was equivalent to 8.4% of GDP that year, and meant an increase of 1.2 percentage points in GDP against the 2016 figure.
Public Finance Statement
|Operation Statement - General Government1||Current values (1 000 000 R$) (em 31.12)|
|Central Government||State Governments||Municipal Governments||Consolidation||General Government|
|Transactions affecting net worth|
|1.2. Social contribution||622,680||40,555||57,273||0||720,508|
|1.4. Other revenue||324,841||44,203||78,911||-43,925||404,029|
|2.1. Employees' compensation||277,318||313,440||279,950||0||870,708|
|2.2. Use of goods and services||73,543||107,247||167,059||0||347.849|
|2.3. Consumption of fixed capital||33,203||35,662||32,539||0||101,403|
|2.7. Social benefits||992,917||160,148||45,925||0||1,198,990|
|2.8. Other expenses||11,360||33,670||34,284||0||79,315|
|Gross operating profit - ROB (1-2+23)||-516,745||-8,506||44,908||0||-480,344|
|Net operating income - ROL (1-2)||-549,948||-44,167||12,369||0||-581,747|
|Transactions with non-financial assets|
|31. Net investment in non-financial assets||-17,468||-3,295||-9,712||0||-30,474|
|311. Fixed assets||-9,869||-3,376||-9,745||0||-22,990|
|314. Non-produced assets||-8,730||0||0||0||-8,730|
|Net lending (+) / Net borrowing (-) (1-2-31)||-532,480||-40,872||22,081||0||-551,272|
|1. Expenditures, excluding consumption of fixed capital||2,353,997||810,118||533,486||-584,801||3,112,799|
|2. Gross acquisition of fixed assets||23,334||32,285||22,794||0||78,413|
|3. Primary Net Lending (+)/Borrowing (-)||-157,262||8,636||12,019||0||-136,607|
|Sources: 1. Ministério da Economia, Secretaria do Tesouro Nacional.
3. Banco Central do Brasil.
Note 1: Methodological information is available in the technical notes of the publication.
In 2017, the main contribution to that result came from the increase of social benefits (about 13%), of compensation (about 7%), and of net expenditures (expenses minius revenues) with interest, which changed from R$ 375.1 billion, in 2016, to R$ 414.7 billion in 2017, a change of 10.5%.
That same pace of increase was not observed in revenues from taxes and social contributions (5.5% and 4.7%, respectively), the main categories of revenue from the general government. The main contributions to the increase of tax revenue came from taxes on goods and services (7.7%) and property taxes (7.5%). Among taxes on income, profit and capital gains, a highlight was the decrease of 6.8% in the collection of income taxes paid by corporations and other companies. The decrease was due to the high basis for comparison in 2016, the expanded tax collection as a result of the Special Regime of Foreign Exchange and Tax Regulation (RERCT), which enabled the repatriation of resources from abroad. That special regime had an impact not only on income taxes, but also on Other Revenues, which recorded negative changes.
Considering data from the Intermediate Government Account, the increase of social benefits was more significant in the federal level of government, due to the impact of withdrawals from inactive FGTS accounts. Between 2016 and 2017, the category Other Benefits from Social Security, which encompasses FGTS withdrawals, recorded and increase of 20.4%, whereas Social Security Benefits, which covers, mainly, benefits from the Social Security System, had a positive change of 8.9%.
Government’s Gross Fixed Capital Formation (FBCF) – still encompassing the three levels of government – remained on a downward trend, having changed from R$ 92.7 billion, in 2016, to R$ 80.3 billion, in 2017. That represented a nominal decrease of 13.3%. The main influence was the decrease of about 40% in the investments of municipal governments. Nevertheless, there was recovery of investments at state level (an increase of 8.8% against a decrease of 13.% in 2016) and federal level (an increase of 0.9% against a decrease of 9.1% in 2016).
In 2017, government’s value added hit R$ 969.7 billion, with a nominal increase of 6.6% against 2016. Changes were positive at all levels of government, but more significant at federal level: it recorded a change in participation from 31.1% in 2016 to 32.0% in 2017. Also from 2016 to 2017, state participation recorded a slight decrease (from 36.9% to 35.9%) and municipal participation remained stable, at 32.1%.
The particiapation of municipal governments in value added was 31.6% in 2014; it fell to 31.4%, in 2015, and hit 32.1% in 2016. Federal and state levels recorded a decrease in participation of 0.3% each, in the same period, from 2015 to 2016.