Public Finance: Government Net Borrowing falls 23.9% in 2019
October 23, 2020 10h00 AM | Last Updated: November 17, 2020 10h36 AM
The government's net borrowing, in Public Finance Statistics, was R$ 366.9 billion, a drop of 23.9% in relation to 2018. This result is due to the 8.6% growth of total revenue, as opposed to an increase of 4.3% in the total expenses of the three spheres of the government.
Gross Fixed Capital Formation, as measured by the Government Intermediate Account, fell by 1.1%, from R$ 94 billion (in 2018) to R$ 92.9 billion (2019).
These are some highlights from the Public Finance Statistics and Government Intermediate Account 2019, developed by the IBGE in partnership with the Secretariat of National Treasury (STN) and the Central Bank of Brazil.
Public Finance Statement - 2019
|General Government Operation Statement (1)||Current Values (Million R$) (as of Dec/31)|
|Central Government||State Government||Municipal Government||Consolidated||General Government|
|Transactions affecting government's equity|
|1.3||Transfers / Loans||1.055||253.630||390.264||-644.934||15|
|2.2||Use of goods and services||63.040||116.790||205.210||0||385.039|
|2.3||Consumption of fixed capital||36.873||40.535||37.632||0||115.040|
|2.6||Transfers / Borrowings||484.082||162.564||748||-644.934||2.460|
|Gross Operational Result - ROB (1-2+23)||-378.486||28.712||69.284||0||-280.490|
|Net Opreational Result - ROL (1-2)||-415.359||-11.823||31.652||0||-395.530|
|Transactions with non-financial assets
|3.1||Net investment in non-financial assets
|3.1.3||Objects of value||44||0||0||0||44|
|Net lending (+) / borrowing (-) (1-2-31)||-396.522||1.346||28.256||0||-366.920|
|1.||Expense, except consumption of fixed capital||2.535.962||897.950||619.337||-684.287||3.368.963|
|2.||Gross fixed asset||24.175||27.360||40.571||0||92.107|
|3.||Primary net lending (+)/ borrowing (-)||-84.737||47.937||16.908||0||-19.893|
|Sources: 1. Ministério da Economia, Secretaria do Tesouro Nacional. 2. IBGE. 3. Banco Central do Brasil.
Note 1: Methodological information is available in the publication's technical notes.
In 2019, the government's net borrowing, registered in the Public Finance Statistics, kept the down ward trend seen in the previous year, reaching R$ 366.9 billion, a drop of 23.9% in relation to 2018.
On the revenue side, the 5.7% growth in tax groups contributed to this performance. The main positive changes were those of taxes on income, profits and capital gains (9.6%), with a highlight to taxes on personal income (13.0%), and taxes on property (9, 1%). Taxes on international trade and transactions (5.4%) and on goods and services (3.5%) decelerated compared to 2018, when the changes were of 25.8% and 8.9%, respectively.
In the case of taxes on trade and international transactions, the slowdown is related to the combined effect of the fall in the dollar value of imports (-2.1%) and the increase in the average exchange rate for the period (around 8%). In taxes on goods and services, the highlight is the negative contribution of the Contribution to the Social Security Funding and of the Contribution to the Social Integration Program (PIS/COFINS) - which was affected by the increase in fuel tax rates in 2018, later reversed in 2019. The other highlight is the 11.7% positive change in taxes on financial and capital transactions.
Other sources that had a relevant contribution to the behavior of total revenues are classified in the property income group. The increase in property income was influenced by the collection on ownership transfer for non-produced assets, which includes the revenue from the auction of petroleum surplus from transfer of rights (assignment for consideration) that took place in November 2019, in addition to the ownership transfers of new petroleum fields.
These events resulted in an increase of 88.1% in the ownership transfers of non-produced assets in relation to 2018. Dividend income is also part of property income, with an increase of 143.2% in relation to 2018, especially due to the increase in dividend distribution from the National Bank for Economic and Social Development (BNDES).
In Public Finance Statistics, net expenses (expenses less revenue) with interest increased from R$ 423.9 billion in 2018 to R$ 347.0 billion, a reduction of 18.1% that contributed to the decrease in Net Borrowing. Compensation increased 5.4%, influenced especially by the municipal sphere. Total social benefits accelerated, with a growth of 9.7% against a positive change of 1.6% in the previous year.
In the case of social benefits, there was again an impact of new withdrawal modalities from the FGTS (severance pay) accounts, an event that was observed in 2017, not repeated in 2018, and reoccurred in 2019. Withdrawals of the FGTS influenced the growth of benefits in general and, mainly, of the Other Social Security Benefits as classified in the Government Intermediate Account, which grew 15.1%.
Social benefits disaggregated by type of transaction, including social security benefits, which mainly include the benefits of the General Social Security System, presented a positive change of 6.2%, while welfare benefits (Bolsa Família, Continuous Cash Benefit - BPC, among others) rose 7.4%.
The Gross Fixed Capital Formation (GFCF), captured in the Government Intermediate Account, fell in its total value, reversing the recovery observed in the previous year, going from around R$ 94 billion to R$ 92.9 billion, a negative change of 1.1%.
This reduction was more intense in the expenses of the state governments, which, in the previous year, had registered an increase of 9.4% and suffered a drop of 24.8% in 2019. Likewise, the federal government presented a reduction of 5.0%, compared to a 6.5% growth observed in the previous year. In contrast to the other spheres, municipal governments increased investments by 28.3%, reducing the fall in the total gross fixed capital formation of the General Government sector in 2019.
The Government Intermediate Account provides a first approximation of the added value of the general government, and, consequently, of its contribution to the calculation of the Gross Domestic Product (GDP) for 2019 in the Annual National Accounts, and its composition among the spheres of government.
In 2019, the government's value added reached R$ 1,069.1 billion, an increase of 5.1% compared to 2018. This change was positive in all spheres, but more intense in the municipalities (7, 0%) and lower in state governments (3.2%).
The federal government grew 5.4%, close to the average change of the institutional sector. With this behavior, municipal governments increased their participation by 0.6 percentage points in the total value added of the sector from 32.1 to 32.7%, while state governments lost 0.7 percentage points in contribution.