Brazil primary surplus widens

Brazil's primary budget surplus edged wider in January, the central bank said on Friday, putting the administration of President Dilma Rousseff on a slow path to healthier public accounts. The consolidated primary surplus, or excess of revenue over expenses excluding interest payments, jumped to 17.7 billion reais ($10.7 billion) in January, up from 16 billion reais a year earlier.
It was the second highest surplus on record for the month of January. "The year kicked off with a good performance," said Tulio Maciel, head of the central bank's economic department. The numbers provide the first reading of Rousseff's fiscal discipline after her predecessor Luiz Inacio Lula da Silva hiked public spending last year in the run-up to October presidential elections. The fiscal stimulus helped the economy expand above 7 percent, but also contributed to fuelling inflation.
The government had been expected to post a primary surplus of 17.8 billion reais in January, according to the median forecast of 10 analysts surveyed by Reuters. But the strong performance in January was due mostly to higher tax revenues, leaving investors waiting for further proof that the government will be able to see through budget cuts of 50 billion reais it announced earlier this month.
The Rousseff administration postponed from this week until next week the announcement of details of those cuts, stoking worries about its commitment to belt-tightening. Still, the January result marks a gradual improvement in Brazil's public accounts. In the 12 months through January, the primary budget surplus grew to 2.81 percent from 2.79 percent in December and 2.51 percent in November. The government for this year set its primary surplus target at 118 billion reais. "The central bank expects the full target to be met" this year, Maciel said.