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Public Finances

Public finances: net borrowing of government grew 89.0% in 2022

November 24, 2023 10h00 AM | Last Updated: November 28, 2023 11h01 AM

In 2022, net borrowing of the government increased 89.0% over 2021 and reached R$380.8 billion.

Total revenue grew 16.6% and expenditures of the three government spheres increased 20.4%.

In 2022, payment of social security and assistance benefits rose 31%.

Gross fixed capital formation grew 65.2%, reaching R$200.2 billion.

In 2022, expenditures impacted more than revenues in the public finances. Net borrowing of the general government was of R$380.8 billion, showing and increase of 89.0% in relation to 2021. This result mas mainly due to the growth of 20.4% in the total expenditure in opposition to an increase of 16.6% in the revenue computed in the three levels of government. The data are from Statistics of Public Finances, released today (24) by the IBGE.

“Expenditures grew more than revenues and, as a result, net borrowing increased as well. The year of 2021 was of post-pandemic recovery. With the rise of expenses in an electoral year like 2022, the level of net borrowing (R$380 million) returned to the pre-pandemic level,” explains the manager of Public Administration of the Coordination of National Accounts, Douglas Moura Guanabara.

The behavior of the revenues was due to the positive change of most components: tax collection grew 13.0%, social contributions rose 13.7% and other revenues increased 36.0%. Only taxes on trade and foreign transactions dropped (-4.8%), justified by the reduction in the exchange rate and in the effective rate of the imports tax.

“The rise in the contributions reflected the upturn of the economy; tax collection was at a normal level, since 13% represent a nominal growth. Other revenues increased 36.0%, including components like interests, due to the rise of the Selic rate, and other punctual  components like the privatization of Eletrobras, as well as the rise of the dividends of federal state-run companies that showed good results,” analyzes the manager of the survey.

Result of Operations - General Government Current values (1 000 000 R$) ( em 31,12)
Central Government State Governments Municipal Governments Consolidation Column General Government
1 Revenue 2,986,152 1,345,878 1,047,916 -1,130,338 4,249,607
11 Taxes 1,484,318 803,965 198,843 0 2,487,125
12 Social contributions 851,952 114,841 50,413 0 1,017,207
13 Transferences / Donations 951 326,009 726,120 -1,053,057 22
14 Other revenues 648,931 101,062 72,541 -77,281 745,253
1411 Interests 302,704 20,251 38,370 -77,281 284,044
14x Other 346,227 80,812 34,171 0 461,209
2M Expenditure (2+31) 3,417,550 1,369,766 973,460 -1,130,338 4,630,437
2 Expense 3,440,643 1,334,537 945,665 -1,130,338 4,590,507
21 Compensation of employed persons 320,344 432,232 421,103 0 1,173,678
22 Use of goods and services 71,222 180,363 294,048 0 545,633
23 Consumption of fixed capital 43,183 57,060 55,901 0 156,144
24 Interests 772,031 94,391 8,980 -77,281 798,121
25 Subsidies 17,670 2,057 7,413 0 27,140
26 Transferences / Donations 792,930 258,056 4,452 -1,053,057 2,381
27 Social security and assistance benefits 1,376,092 237,341 76,109 0 1,689,542
28 Other expenses 47,170 73,037 77,659 0 197,867
31 Net investment -23,093 35,229 27,795 0 39,931
311 Fixed assets -19,461 34,956 26,637 0 42,132
312 Stocks 793 274 1,158 0 2,225
313 Valuable objects 18 0 0 0 18
314 Non-produced assets -4,444 0 -1 0 -4,445
  Net lending (+)/borrowing(-) (1-2M) -431,398 -23,889 74,457 0 -380,830
  Primary net lending (+)/borrowing(-)  ((1-1411)-(2M-24)) 37,929 50,251 45,066 0 133,247
Sources: 1. Ministry of Finance/STN, 2. IBGE, 3. Central Bank of Brazil

Taxes on goods and services grow less due to exemptions

Concerning taxes, the highlight was the increase of 30.2% of taxes on income, profits and capital gains. The rise of tax collection with income tax returns and fixed income funds (IRRF Capital) leveraged this result. Taxes on property grew 11.5% (increase of 24.5% in the IPVA collection) and taxes on goods and services grew only 4.6%, a result justified by the reduction of 35% in the IPI rate (Decree 11,158/22), reduction to zero in the CIDE and PIS-COFINS rates on fuels (LC 192 and LC 194) and the reduction in the ICMS rate on fuels (LC 194).

Selic, Petrobras and privatization of Eletrobras explain rise in other sources of revenue

Among the other sources with weight in the composition of total revenues, the highlight was asset income, which grew 49.2% in the period under analysis. It was due to the rise in the following variables: revenue with interests (42.9%), reflecting the increase in the average Selic rate in the year; revenue from dividends (88.9%), highlighted by the financial results of state-run companies (especially Petrobras); and revenue from concessions (43.8%), a result justified by the privatization of Eletrobras and resources from the exploitation of petroleum.

Except for transferences and donations, all the expense items rose

On the expenses side in the Statistics of Public Finances, except for transferences and donations (which reduced 54.2% in 2022), all the items registered positive changes, contributing to the increase in net borrowing in the period. Social security and assistance benefits, compensation, interests and use of goods and services, items with higher weight in the expenses, rose 15.1%, 13.6%, 32.6% and 22.4%, respectively. Expenditures with subsidies and other expenses also grew in the period, with increases of 52.1% and 23.1%, respectively.

Brazil Aid and assistance to drivers rise expenses with social benefits

The growth of the expenses with social security and assistance benefits was especially due to the increase in the expenses with financial aids to natural persons and families. With the creation of the Brazil Aid Program and aids to freelance carriers and taxi drivers, this expense item grew 31.0% in 2022 over the previous year. Expenses with other social security benefits, which include several aids (like illness, accidents and reclusion among others), increased 20.7% in the period and contributed to this result.

“The creation of these programs, which replaced Bolsa Família, increased the expenses, causing a jump of 31% in the social security benefits,” completes Guanabara.

States and municipalities rise their share in Value added

In 2022, the added value of the government registered in the Government Intermediate Account was of R$1,331.4 billion and its share in the GDP was of 13.4%, which represents a drop of 0.2 percentage points in relation to 2021. That change was positive in all the spheres: 3.1% in the federal one, 17.1% in the state one and 17.9% in the municipal one. Therefore, the federal sphere lost 2.7 percentage points of share in the value added of government, changing from 30.0% in 2021 to 27.3% in 2022. On the other hand, state and municipal administrations increased their shares by 1.2 and 1.5 percentage points, respectively: states changed from 35.6% to 36.8% and municipalities changed from 34.4% to 35.9% in the period.

“Unlike states and municipalities, which gained share in the value added, the previous federal administration froze salaries and virtually hindered salary raises,” clarifies the manager of the survey.

Gross Fixed Capital Formation grows 65.2%

Captured in the Government Intermediate Account, Gross fixed capital formation (GFCF) reached R$200.2 billion in 2022, which represents an increase of 65.2% over 2021. This result was influenced by the growth in investments of 83.3% and 72.3% of the state and municipal administrations, respectively. The federal government reversed the decreasing path of the previous years (-3.0% in 2020 and -8.4% in 2021) and rose 8.6% in 2022.

“The jump in the GFCF was due to the increase in the revenues of states and municipalities like, for example, a rise of 25% in the ICMS collection in 2021, changing from R$525 billion in 2020 to R$655 billion in 2021. In 2022, state investments changed from R$50 billion to R$92 billion,” concludes Guanabara.