State-owned profits could send government back to the blue after eight years

Petrobras’ record profits, which President Jair Bolsonaro (PL) even called it “rape” at a time of rising fuel prices, they can now help the central government (Treasury, Social Security and Central Bank) to record the first primary surplus after eight years in the red.

In the most recent National Treasury revenue and expenditure report, released at the end of July, the projection of the primary result had already changed from a deficit of R$ 65.5 billion to R$ 59.35 billion. Even without the figures for the second quarter of Petrobras, the economic team was already talking expectations, albeit small, of closing the year in the blue.

Economy Minister Paulo Guedes said it was possible to bring the Union deficit to zero in 2019, in the first year of government, but the goal has only gotten closer now, thanks to the sharp rise in state-owned profits and other extraordinary revenues.

At the end of July, the oil company announced a profit of R$ 54.3 billion for the period from April to June and the distribution of a record value of BRL 87.8 billion in dividends to be paid in August and September. Of this amount, the Union, as the majority shareholder, will directly receive R$ 25.2 billion.

With the BRL 45.2 billion that the Treasury already had in revenue from state dividends this year, the federal government now accumulates BRL 70.4 billion in transfers from state companies in 2022.

The value already exceeds by 28.4% a projection made by the economic team before the announcement of Petrobras’ results. The calculations pointed to BRL 54.8 billion in extra income from dividends and participations by the end of the year – an estimate that had already been revised upwards after complementary payments of BRL 18.9 billion from BNDES referring to profits calculated in 2020 and 2021 .

Until December, Petrobras dividends corresponding to the result of the third quarter will also be received. In addition, the government can receive onlendings from BNDES and Caixa that would originally only be paid in 2023, but that the companies consider to anticipate after a request from the Ministry of Economy.

BNDES itself is also a shareholder of Petrobras and, therefore, will receive R$ 6.97 billion in dividends referring to the oil company’s second quarter results.

With all this, the total of profits transferred from state-owned companies to the federal government this year should exceed R$ 100 billion, with an increase of more than 130% compared to 2021, when the Federal Government obtained BRL 43 billion in dividends and interest on equity (JCP).

In addition, among other extraordinary revenues, there was a substantial increase in the item “concessions and permissions”, of R$ 26.87 billion, mainly due to the collection of revenues from new electricity generation contracts. arising from the privatization of Eletrobras.

Extra revenue exceeds spending on fuel exemption and Benefits PEC

After the figures are completed, the extraordinary income must cover, with a gap of more than R$ 42 billion, the hole opened by Constitutional Amendment 123/2022, which created and expanded social benefits until the end of the year, and by Complementary Law 194 /2022, which temporarily zeroed the PIS, Cofins and Cide rates for gasoline and ethanol.

Constitutional Amendment 123, which boosted Auxílio Brasil and the gas voucher until December, in addition to launching vouchers for truck drivers and taxi drivers, generated an additional expense of R$ 41.25 billion for the Federal Government this year. And the removal of federal taxes on fuel will have an impact of R$ 16.5 billion. With this, the total amount of expenses not foreseen in the Budget reaches R$ 57.75 billion.

Finally, an agreement signed between the Federal Government and the city of São Paulo related to the Campo de Marte Airport transfer agreement should positively impact the central government balance by over R$24 billion. The operation involved a meeting of accounts, with the termination of a debt of the municipality with the Union in exchange for the amount of compensation owed by the federal government for the use of the area.

Thus, new unforeseen revenues may exceed projected expenditures to date by some margin, making the possibility of the first primary surplus of the central government since 2013 more tangible. Last year, there was a surplus of the consolidated public sector, when considering the balance sheets States, municipalities and state-owned companies. The federal government, however, had a deficit of R$ 35.1 billion.

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