By Marcela Ayres and Jamie McGeever
BRASILIA (Reuters) – Brazil’s government posted its smallest annual deficit last year since 2014, Treasury figures on Wednesday showed, indicating that its concerted effort to balance out the public finances is bearing fruit.
The central government’s primary deficit, before interest payments are taken into account, of 95.07 billion reais ($22.6 billion) marked the sixth consecutive year that expenditure has exceeded income, but was the smallest deficit since 2014.
It was down almost a quarter from the previous year’s 120.3 billion reais deficit, and came in well below the government’s original target of around 139 billion reais.
As a share of gross domestic product, the deficit fell to 1.3% from 1.7% the year before, also below the government’s target of 1.9% of GDP. Net receipts rose 5.6% to 1.35 trillion reais, and expenses increased 2.7% to 1.44 trillion reais.
One-off inflows, such as proceeds from November’s oil auctions, helped boost the figures, Treasury said, stressing that the squeeze on spending will intensify.
“The fiscal policy outlook remains challenging… (but) this effort is fundamental to… (getting) public debt to more prudent levels and ensuring the path towards sustainable economic growth,” Treasury said in a statement.
The government’s main legislative success of last year was congressional approval of a sweeping pension reform bill which aims to save the public purse around 1 trillion reais over the next decade, via a range of measures including raising the minimum retirement age and increasing pension contributions.
Wednesday’s figures showed that social security expenditure last year rose 5.3% in real terms to 213.18 billion reais.
For the month of December, the government posted a primary budget deficit of 14.64 billion reais, less than half the 31.75 billion shortfall the same month a year earlier.
(Reporting by Jamie McGeever and Marcela Ayres; Editing by Chizu Nomiyama and Rosalba O’Brien)