September/2013 Vol. 19, N. 09 National Treasury Fiscal Balance Brasília October/2013
MINISTER OF FINANCE Guido Mantega NATIONAL TREASURY SECRETARY Arno Hugo Augustin Filho DEPUTY SECRETARIES Cleber Ubiratan de Oliveira Eduardo Coutinho Guerra Gilvan da Silva Dantas Líscio Fábio de Brasil Camargo Marcus Pereira Aucélio Paulo Fontoura Valle HEAD OF FISCAL AND ECONOMIC STUDIES DEPARTMENT Fabiana Magalhães Almeida Rodopoulos DEPUTY HEAD OF FISCAL AND ECONOMIC STUDIES DEPARTMENT Alex Pereira Benício TECHNICAL STAFF Bruno Fabrício Ferreira da Rocha Erika Medeiros de Siqueira Guilherme Ceccato Karla de Lima Rocha Maria da Glória Felgueiras Nicolau The National Treasury Fiscal Balance is a monthly publication of the National Treasury Secretariat. Reproduction in full or in part is permitted, provided the source be given proper credit. Information: Phone: 55 (61) 3412-2203 Fax: 55 (61) 3412-1700 E-mail: cesef.df.stn@fazenda.gov.br Home Page: www.tesouro.gov.br National Treasury Secretariat Esplanada dos Ministérios, Bloco P, Anexo, 1º Andar, Ala B, Sala 134 70048-902 - Brasília-DF 2
Contents Central Government Primary Balance...5 National Treasury Revenues...7 Grants to States and Municipalities...11 National Treasury Expenditure...13 Social Security...19 List of Tables Table 1 Central Government Primary Balance...5 Table 2 Central Government Primary Balance - % GDP...6 Table 3 Central Government Primary Revenue...7 Table 4 Dividends Received...9 Table 5 National Treasury Gross Revenue - % GDP...10 Table 6 - Grants to States and Municipalities...11 Table 7 - Grants to States and Municipalities - % GDP...12 Table 8 Central Government Primary Expenditure...13 Table 9 Other Current and Capital Expenditures Monthly Balance...14 Table 10 - Other Current and Capital Expenditures Yearly Balance...16 Table 11 Economic Subsidies and Grants - Official Credit Operations Yearly Balance...17 Table 12 Quantity of Issued Benefits Yearly Average...17 Table 13 National Treasury Expenditures - % GDP...18 Table 14 Social Security Primary Balance...19 Table 15 Quantity of Benefits Conceded of the General Regime...20 Table 16 Social Security Primary Balance - % GDP...21 3
Graphics List Graph 1 - Revenue, Expenditure and Central Government Primary Balance...6 Graph 2 - Central Government Primary Balance...6 Graph 3 - National Treasury Gross Revenue- Monthly Balance...8 Graph 4 - National Treasury Gross Revenue-Yearly Balance...9 Graph 5 - Grants - Calculation Basis...11 Graph 6 - National Treasury Expenditures Monthly Balance...14 Graph 7 - Current and Capital Expenditures- Monthly Balance...14 Graph 8 - National Treasury Expenditures- Yearly Balance...15 Graph 9 - Current and Capital Expenditures- Yearly Balance...15 Graph 10 - Outstanding Commitments...16 Graph 11 - Benefits Conceded by the General Regime...20 4
Central Government Primary Balance Central Government primary balance was a R$ 10.5 billion deficit in September 2013, compared to a R$ 99.5 million surplus in August. The Social Security System (RGPS) and the Central Bank recorded a deficit of R$ 11.8 billion and R$ 31.0 billion, respectively, while the National Treasury recorded a surplus of R$ 1.3 million. Table 1 - Central Government Primary Balance 1 - Brazil - 2012 / 2013 Description Aug/13 Sep/13 % Variation R$ Million % Variation I. TOTAL REVENUE 89,331.9 86,972.1-2.6% 773,235.5 834,767.2 8.0% National Treasury Revenues 64,110.0 61,581.9-3.9% 578,959.6 618,106.6 6.8% Social Security Revenues 24,881.3 25,025.1 0.6% 192,269.2 214,285.9 11.5% Central Bank Revenues 340.7 365.1 7.2% 2,006.7 2,374.8 18.3% II. TRANSFERS TO STATES AND MUNICIPALITIES 16,058.1 14,032.3-12.6% 130,710.1 139,843.1 7.0% III. TOTAL NET REVENUE (I-II) 73,273.8 72,939.8-0.5% 642,525.4 694,924.1 8.2% IV. TOTAL EXPENDITURE 73,174.3 83,412.9 14.0% 587,723.4 666,981.1 13.5% Treasury Expenditures 42,242.0 46,228.3 9.4% 353,695.8 402,150.4 13.7% Social Security Benefits 30,614.5 36,788.4 20.2% 231,466.6 261,899.2 13.1% Central Bank Expenditures 317.8 396.2 24.7% 2,561.0 2,931.6 14.5% V. SOVEREIGN WEALTH FUND - FSB 2 0.0 0.0-0.0 0.0 - VI. CENTRAL GOVERNMENT PRIMARY BALANCE (III - IV - V) 99.5-10,473.1-54,802.0 27,943.0-49.0% National Treasury 5,809.9 1,321.3-77.3% 94,553.7 76,113.1-19.5% Social Security (RGPS) -5,733.2-11,763.4 105.2% -39,197.5-47,613.2 21.5% Central Bank 3 22.8-31.0-236.0% -554.2-556.8 0.5% VI. PRIMARY BALANCE/GDP 1.69% 0.80% 1. Since 03/01/2012, it includes supplemental amounts of FGTS and its corresponding outlays, according to National Treasury Regulation 278, from 04/19/2012. 2. In 2008 it corresponds to the expenses related to paid-in capital for the Fiscal Investment and Stabilization Fund (FFIE) from the SFB, as established by Law 11,887/2008, MP 452/2008 and Decree 6,713/2008. In 2012 it corresponds to the revenue from the redemption of quotas from the Fiscal Fund for Investment and Stabilization, according to CDFSB resolution 9/2002. 3. Administrative expenditures net of own revenues (includes transfers from the National Treasury). Central Government primary balance was a R$ 10.5 billion deficit in September 2013, compared to a R$ 99.5 million surplus in August 2013. It reflects seasonal factors on Social Security expenditures due to the partial payment of Christmas bonus to a group of retirees and recipients (Decree 8,064/2013) Revenues of the Central Government recorded a decrease of R$ 2.4 billion (2.6%), going from R$ 89.3 billion in August to R$ 87.0 billion in September 2013. This performance was determined mainly by the reduction of R$ 3.4 billion (28.0%) in the collection of other revenues, and partially compensated by the increase of R$ 508.1 million in the collection of taxes and contributions. Concerning expenses, there was an increase of R$ 10.2 billion (14.0%) when comparing September to August 2013. There was an increase of R$ 6.2 billion (20.2%) in Social Security benefits expenditures and R$ 4.0 billion (9.4%) in treasury expenditures. 5
Graph 1. Revenue, Expenditure and Central Government Primary Balance Brazil - 2012/2013 - R$ Billion Graph 2. Central Government Primary Balance Brazil - 2012/2013 - R$ Billion 642.5 694.9 587.7 667.0 /12 /13 94.6 76.1 /12 /13 Primary surplus recorded R$ 27.9 billion from January to September 2013. 54.8 27.9 Total Net Revenue Total Expenditure Primary Balance National Treasury -39.2-47.6 Social Security Primary surplus, from January to September 2013, decreased R$ 26.9 billion (49.0%) compared to the same period of 2012. This behavior reflects the reduction of R$ 18.4 billion (19.5%) in the National Treasury surplus, an increase of R$ 8.4 billion (21,5%) in the Social Security deficit and of R$ 2.6 million (0.5%) in the Central Bank deficit. Central Government revenues recorded a growth of R$ 61.5 billion (8.0%) in the first nine months of 2013 compared to the same period of 2012. This growth is mainly due to the increases in the collection of Taxes (increase of R$ 7.6 billion in Corporate income tax IRPJ, R$ 4.4 billion in Import Taxes and of R$ 2.3 billion in the collection of Withheld Income Tax - IRRF), in Contributions (increase of R$ 12.8 billion in Contribution to Social Security Financing Cofins, of R$ 3.4 billion on Social Contribution on Net Corporate Profits CSLL and R$ 3.1 billion related to PIS/PASEP collection), and in Concessions (growth of R$ 5.9 billion). On the other hand, there was a reduction of R$ 5.2 billion in the collection of dividends and R$ 2.7 billion in the collection of the Contribution on Intervention in the Economic Domain (CIDE) - Fuels. From January to September 2013, Grants to States and Municipalities recorded a growth of R$ 9.1 billion (7.0%) compared to the same period of 2012, mainly due to the growth of R$ 7.4 billion (7.6%) in constitutional transfers and the raise of R$ 1.5 billion in other transfers, due to the first installment of the Municipalities Financial Support, as stated by Law 12,859/2013. Compared to the first nine months of 2012, Central Government expenses increased R$ 79.3 billion (13.5%) in 2013. This growth is mainly due to the rise of R$ 36.6 billion (17.0%) in Other Current and Capital expenditures and of R$ 30.4 billion (13.2%) in Social Security benefits expenditures. 6 Table 2 -Central Government Primary Balance - Brazil - 2012 / 2013 Description % GDP CENTRAL GOVERNMENT 1.69% 0.80% National Treasury 2.92% 2.17% Social Security -1.21% -1.36% Central Bank -0.02% -0.02%
National Treasury Revenues Table 3 - Central Government Primary Revenue 1 - Brazil - 2012 / 2013 Description Aug/13 Sep/13 % Variation R$ Milion % Variation I. TOTAL REVENUE 89,331.9 86,972.1-2.6% 773,235.5 834,767.2 8.0% I.1. National Treasury Revenues 64,110.0 61,581.9-3.9% 578,959.6 618,106.6 6.8% Gross Revenue 2 66,274.5 63,425.8-4.3% 593,651.0 632,770.2 6.6% Taxes 28,293.2 29,065.6 2.7% 276,316.5 293,015.8 6.0% Income tax (IR) 18,648.8 18,798.3 0.8% 195,483.5 209,317.4 7.1% Industrialized Products Tax (IPI) 3,884.5 4,096.6 5.5% 34,408.7 34,267.6-0.4% Other 5,759.9 6,170.8 7.1% 46,424.3 49,430.8 6.5% Social Contributions 25,985.0 25,720.7-1.0% 225,355.3 244,698.1 8.6% Cofins 3 15,908.1 15,829.1-0.5% 127,381.6 140,192.9 10.1% CSLL 4 3,773.3 3,548.1-6.0% 43,683.3 47,110.8 7.8% Pis/Pasep 5 4,151.0 4,143.3-0.2% 34,055.6 37,182.1 9.2% CIDE-Fuels 0.8 0.8-4.3% 2,735.1 8.3-99.7% Others 2,151.8 2,199.4 2.2% 17,499.6 20,204.0 15.5% Others 11,996.3 8,639.6-28.0% 91,979.2 95,056.3 3.3% Financial Compensation Quotas 1,796.2 1,924.9 7.2% 26,802.4 26,750.3-0.2% Directly Collected 2,944.9 3,296.0 11.9% 29,948.7 33,542.0 12.0% Concessions 876.1 17.2-98.0% 1,082.1 7,002.0 547.1% Dividends 4,814.2 1,969.0-59.1% 19,728.1 14,547.1-26.3% Other 1,564.9 1,432.6-8.5% 14,417.9 13,215.0-8.3% (-) Restitutions -2,164.4-1,843.9-14.8% -14,555.0-14,612.1 0.4% (-) Fiscal Incentives 0.0 0.0 - -136.4-51.6-62.2% I.2. Social Security Revenues 6 24,881.3 25,025.1 0.6% 192,269.2 214,285.9 11.5% Social Security Revenues - Urban 24,347.4 24,491.5 0.6% 188,047.9 209,784.8 11.6% Social Security Revenues - Rural 533.8 533.6 0.0% 4,221.2 4,501.2 6.6% I.3. Central Bank Revenues 340.7 365.1 7.2% 2,006.7 2,374.8 18.3% 1. Since 03/01/2012, it includes supplemental amounts of FGTS, according to National Treasury Regulation 278, from 04/19/2012. 2. It excludes the employer share of federal civil service CPSS payments from revenues originating in contributions to the Social Security Plan (CPSS) and personnel outlays, with no impact on the consolidated primary balance. 3. Contribution to Social Security Financing. 4. Social Contribution on Net Corporate Profits. 5. Contribution to the Social Integration Program and Civil Service Asset Formation Program. 6. Source: Ministry of Social Security. Compilation of the RGPS result distributed by urban and rural clientele is made by the Ministry of Social Security according to a specific methodology. National Treasury Gross Revenues decreased 4.3% compared to the previous month, particularly due to seasonal factors. 7
National Treasury Revenues Monthly Balance compared to the previous Month National Treasury Gross Revenue decreased R$ 2.8 billion (4.3%), going from R$ 66.3 billion in August 2013 to R$ 63.4 billion in September 2013. This behavior was determined mainly by the increase of R$ 772.4 million in the collection of Taxes, by the decrease of R$ 264.3 million (1.0%) in Contributions, and by the reduction of R$ 3.3 billion (28.0%) in the collection of Other Revenues. In September, the collection of Taxes summed up to R$ 29.1 billion while Contributions added up to R$ 25.7 billion, increasing collectively R$ 508.1 million (0.9%) when compared to August. This behavior reflects mainly the payment, in September, of the first or unique installment of the Rural Property Tax - ITR concerning fiscal year 2012. Graph 3. National Treasury Gross Revenue Brazil - 2013 - R$ Billion The other revenues of the National Treasury decreased R$ 3.4 billion (28.0%), mostly related to the following variations: i) step down of R$ 2.8 billion (59.1%) in Dividend Revenues. Taxes Social Contributions Other 8.6 12.0 26.0 25.7 28.3 29.1 Aug/13 Sep/13 Compared to the first nine months of 2012, the National Treasury gross revenue increased R$ 39.1 billion (6.6%) in 2013, reflecting the performance of the main macroeconomic indicators related to the collection of taxes, as well as the impact of 8 ii) decrease of R$ 858.9 million (98.0%) in concession revenues, particularly due to the collection, in August, of the concession revenues due to the bonus surplus related to the 11 th bidding round of the National Agency of Petroleum, Natural Gas and Biofuels, the ANP, as well as payments relating to the competitive biddings regarding the use of the third generation (3G) broad band service frequencies used in the Personal Mobile Service. National Treasury Revenues Accumulated Balance Compared to the Previous Year From January to September 2013, National Treasury Gross Revenue rose R$ 39.1 billion (6.6%), going from R$ 593.7 billion to R$ 632.8 billion. This growth reflects the performance of the main macroeconomic indicators related to the collection of taxes, as well as the impact of recent tax exemptions. The rise in tax collection and contributions are mainly due to the following factors: i) increase of R$ 7.6 billion (9.2%) in IRPJ and of R$ 3.4 billion (7.8%) on CSLL, explained mostly by: a) the reduction of 51.0% in the collection of IRPJ/CSLL related to fiscal year 2012 tax events; b) the increase of 14.0% on the monthly estimated payments, especially from companies related to the financial sector, and due to the extra collection from the sale of shares in May 2013, which reflected in June;
ii) growth of R$ 12.8 billion (10.1%) on Cofins and of R$ 3.1 billion (9.2%) on PIS-Pasep, particularly due to the expansion of 3.4% in sales of goods and services between December 2012 and August 2013 (PMC-IBGE); to the increase in the collection of PIS/Cofins - Imports, as well as to the step-up in the collection related to judicial deposits; iii) rise of R$ 4.4 billion (19.2%) in Import Taxes, especially due to the rise of: a) 4.7% on the amount of import transactions in dollar; b) 10.5% on the average exchange rate; and c) 3.1% on the average Import Tax; iv) growth of R$ 2.3 billion (4.1%) in IRRF Withheld Income Tax - Wages, reflecting the nominal growth of 11.6% in overall wages between December 2012 and August 2013 in relation to the same period of last year and the decrease due to a new tax regulation on companies profit sharing (PM 597/2012); v) increase of R$ 1.6 billion (8.5%) in IRPF - Personal Income Tax, due to the rise of 8.8% in the payment of the installments related to the 2013 tax statement (base year 2012), the increase of 7.4% in the payment of compulsory income tax on certain earnings personal and the decrease of 16.4% in the collection of capital gain related to sales of assets and. vi) reduction of R$ 2.7 billion (99.7%) in the collection of the Contribution on Intervention in the Economic Domain Graph 4. National Treasury Gross Revenue Brazil - 2012/2013 - R$ Billion (CIDE) - Fuels due to the reduction of CIDE - Fuel rates on gasoline and diesel 276.3 to zero. Taxes Social Contributions Other 92.0 95.1 225.4 244.7 293.0 /12 /13 Other Revenues increased R$ 3.1 billion (3.3%) in the sum of the first nine months of 2013 compared to same period of 2012 mainly due to the following factors: Description Tabel 4 - Dividends - Brazil - 2012 / 2013 R$ Million Banco do Brasil 2,383.0 2,908.5 BNB 122.7 228.0 BNDES 10,620.3 6,391.7 Caixa 3,000.0 3,000.0 Correios 400.0 101.1 Eletrobras 725.0 267.9 IRB 101.7 1.1 Petrobras 1,886.6 1,015.5 Others 488.7 633.2 Total 19,728.1 14,547.1 i) increase of R$ 5.9 billion (547.1%) on concession revenues, mainly due to the following reasons: a) collection of revenues related to Telecommunications services in May, mainly the ones related to the extension of contracts regarding the Public Switched Telephone Network (PSTN) and the Personal Mobile Service (A and B bands); b) payments, in June, relating to the competitive biddings regarding the broad band service and to fourth generation (4G) frequencies used in the Personal Mobile Service; c) collection of the contract bonus on oil fields concessions related to the 11 th bidding round of the National Agency 9
of Petroleum, Natural Gas and Biofuels, the ANP, in July; d) annual installment related to the fixed contribution on public service airport concessions (Guarulhos, Viracopos and Brasilia airports) also in July; and e) payments relating to the competitive biddings regarding the use of the third generation (3G) broad band service frequencies used in the Personal Mobile Service; ii) decrease of R$ 5.2 billion (26.3%) on Dividends; iii) rise of R$ 3.6 billion (12.0%) in the collection of Directly Collected Revenues by the direct and indirect administration, mainly due to the collection of R$ 1.8 billion in June, related to revenues of the National Institute of Colonization and Agrarian Reform (INCRA Ordinance 352 of June 18th, 2013). Table 5 - National Treasury Gross Revenue - Brazil - 2012 / 2013 Description % GDP GROSS REVENUE 18.36% 18.04% Taxes 8.55% 8.35% Income tax (IR) 6.05% 5.97% Industrialized Products Tax (IPI) 1.06% 0.98% Other 1.44% 1.41% Social Contributions 6.97% 6.98% Cofins 3.94% 4.00% CSLL 1.35% 1.34% PIS/PASEP 1.05% 1.06% CIDE-Fuels 0.08% 0.00% Others 0.54% 0.58% Others 2.84% 2.71% Financial Compensation Quotas 0.83% 0.76% Directly Collected 0.93% 0.96% Concessions 0.03% 0.20% Dividends 0.61% 0.41% Other 0.45% 0.38% 10
Grants to States and Municipalities R$ Million Table 6 - Grants to States and Municipalities - Brazil - 2012 / 2013 Description Aug/13 Sep/13 % Variation % Variation TOTAL GRANTS 16,058.1 14,032.3-12.6% 130,710.1 139,843.1 7.0% Constitutional Grants 11,412.9 9,478.3-17.0% 97,282.3 104,675.1 7.6% Complementary Law 87/ Complementary Law 115 1 162.5 162.5 0.0% 1,300.0 1,462.5 12.5% CIDE Grants 0.0 0.0-1,060.9 57.3-94.6% Others 4,482.7 4,391.5-2.0% 31,066.9 33,648.2 8.3% Education-Salary 777.7 796.8 2.5% 6,628.3 7,435.1 12.2% Royalties (Law 9,478/1997) 2,999.1 1,347.4-55.1% 16,864.9 17,231.8 2.2% Fundef/Fundeb 2 682.9 682.9 0.0% 7,351.3 7,222.9-1.7% Others 23.0 1,564.5-222.4 1,758.5 690.7% 1. Complementary Law 87/1996 (until 2003) and Financial Support to States resulting from Complementary Law 115/2002 (from 2003 to 2006). 2. Fund for the Maintenance and Development of the Basic Education. National Treasury Grants to State and Municipalities Monthly Balance compared to the previous Month Grants to States and Municipalities decreased R$ 2.0 billion (12.6%) in September 2013 compared to the previous month, due to seasonal factors in Constitutional grants. On the other hand, R$ 1.5 billion was granted as part of the Municipalities Financial Support, as stated by Law 12,859/2013. In September 2013, grants to States and Municipalities decreased R$ 2.0 billion (12.6%), and added up to R$ 14.0 billion, compared to R$ 16.1 billion in the previous month. This behavior reflects, mainly: i) decrease of R$ 1.9 billion (17.0%) in Constitutional Grants impacted by the collection of shared taxes (Income Tax - IR and Industrialized Income Tax - IPI) as well as the increase of; and ii) reduction of R$ 1.7 billion (55.1%) in the seasonal transfers related to special participation rights on oil and natural gas exploitation, which occurred in August, with no such event in September. On the other hand, R$ 1.5 billion was granted as part of the Municipalities Financial Support, as stated by Law 12,859/2013. Graph 5. Grants - Calculation Basis Brazil - 2013 - R$ Billion Third ten-day period First ten-day period 1.7 2.7 10.2 15.7 Aug/13 Sep/13 Second ten-day period 7.6 7.8 11
National Treasury Grants to State and Municipalities Accumulated Balance Compared to the Previous Year From January to September 2013, Grants to States and Municipalities increased R$ 9.1 billion (7.0%) compared to the same period of 2012. Compared to the first nine months of 2012, grants grew R$ 9.1 billion (7.0%), going from R$ 130.7 billion in 2012 to R$ 139.8 billion in 2013. The main variations were: i) rise of R$ 7.4 billion (7.6%) in constitutional transfers (IPI, IR and others), due to the rise of 7.1% in collection of shared taxes (IR); ii) R$ 1.5 billion granted to the municipalities, which occurred in September, according to Law No. 12,859/2013. iii) decrease of R$ 1.0 billion (94.6%) in grants relating to the Contribution on Intervention in the Economic Domain (CIDE) - Fuels. iii) rise of R$ 806.8 million (12.2%) in grants concerning educational-salary contributions. Table 7 - Grants to States and Municipalities - Brazil - 2012 / 2013 Description % GDP TOTAL Grants 4.04% 3.99% Constitutional Grants 3.01% 2.98% Complementary Law 87/ Complementary Law 115 1 0.04% 0.04% CIDE Grants 0.03% 0.00% Others 0.96% 0.96% 1. Complementary Law 87/1996 (until 2003) and Financial Support to States resulting from Complementary Law 115/2002 (from 2003 to 2006). 12
National Treasury Expenditure Table 8 - Central Government Primary Expenditure 1 - Brazil - 2012 / 2013 Description Aug/13 Sep/13 % Variation R$ Million % Variation I. TOTAL EXPENDITURE 73,174.3 83,412.9 14.0% 587,723.4 666,981.1 13.5% I.1. National Treasury Expenditures 42,242.0 46,228.3 9.4% 353,695.8 402,150.4 13.7% Payroll 2 15,617.9 15,348.8-1.7% 135,874.9 147,510.3 8.6% Current and Capital Expenditures 26,305.6 30,676.9 16.6% 216,187.1 252,826.5 16.9% Workers Support Fund (FAT) 4,509.3 5,188.5 15.1% 29,545.8 34,771.4 17.7% Economic Subsidies and Grants 3 405.5 694.2 71.2% 8,494.0 7,820.1-7.9% Assistance Benefits (LOAS/RMV) 4 2,815.0 2,842.0 1.0% 21,979.9 25,303.9 15.1% Petrobras Capitalization 0.0 0.0-0.0 0.0 - Financial Support to CDE 1,450.0 2,050.0 41.4% 0.0 4,018.0 - Other Current and Capital Expenditures 17,125.7 19,902.1 16.2% 156,167.4 180,913.2 15.8% Other Current Expenditures 13,797.8 15,497.2 12.3% 110,953.7 134,396.2 21.1% Other Capital Expenditures 5 3,327.9 4,404.9 32.4% 45,213.7 46,517.1 2.9% Transfers from Treasury to Central Bank 318.5 202.6-36.4% 1,633.8 1,813.6 11.0% I.2. Social Security Benefit 6 30,614.5 36,788.4 20.2% 231,466.6 261,899.2 13.1% Social Security Benefit - Urban 22,729.8 29,383.0 29.3% 179,213.6 202,563.7 13.0% Social Security Benefit - Rural 7,884.7 7,405.4-6.1% 52,253.1 59,335.5 13.6% I.3. Central Bank Expenditures 317.8 396.2 24.7% 2,561.0 2,931.6 14.5% 1. Since 03/01/2012, it includes outlays executed with FGTS supplemental amount resources, according to National Treasury Regulation 278, from 04/19/2012. 2. It excludes the employer share of federal civil service CPSS payments from revenues originating in contributions to the Social Security Plan (CPSS) and personnel outlays, with no impact on the consolidated primary balance. 3. It includes outlays on grants to regional funds and, as of 2005, spending on the restructuring of liabilities. 4. Social Assistance Organic Act (LOAS) benefits and Lifelong Monthly Income (RMV) are assistance benefits paid by the Central Government. 5. It includes Housing Program (MCMV) expenditure. 6. Source: Ministry of Social Security. Compilation of the RGPS balance distributed by urban and rural clientele is made by the Ministry of Social Security according to a specific methodology. National Treasury expenditures amounted to R$ 46.2 billion, compared to R$ 42.3 billion in August 2013. National Treasury Expenditure Monthly Balance compared to the previous Month In September 2013, National Treasury expenditures amounted to R$ 46.2 billion, which represents an increase of R$ 4.0 billion (9.4%) compared to August 2013. This is mainly due to the increase of R$ 4.4 billion (16.6%) in Current and Capital expenditures and the reduction of R$ 269.2 million (1.7%) in Payroll expenditures. The increase in Current and Capital expenditures is mainly due to the following factors: i) step up of R$ 2.8 billion (16.2%) in Other Current and Capital expenditures mostly explained by the increases of R$ 2.0 billion (16.1%) in Discretionary expenses and of R$ 305.4 million (11.8%) in the Growth Acceleration Program - PAC. In 13
Graph 6. National Treasury Expenditure Brazil - 2013 - R$ Billion Graph 7. Current and Capital Expenditure Brazil - 2013 - R$ Billion Current and Capital Expenditures Payroll 15.6 15.3 26.3 30.7 Aug/13 Sep/13 Others Current and Capital Expenditures Assistance Benefits (LOAS/RMV) Economic Subsidies and Grants Workers Support Fund (FAT) 2.8 2.8 0.4 0.7 4.5 5.2 17.1 19.9 Aug/13 Sep/13 September, there was also a compensation of R$ 979.3 million to Social Security - RGPS relating to May 2013. This compensation stems from the reduction of payroll related contributions, according to Law 12,715/2012, and will follow the schedule stipulated in Interministerial Ordinance RFB/MF/INSS/MPS 2 from March 28 th 2013; ii) increase of R$ 679.2 million (15.1%) in the Workers Support Fund - FAT. These payments observe the calendar for 2013/2014 (August 2013 to July 2014), regulated by Codefat Resolution 714/2013; and iii) issuance of R$ 2.0 billion in bonds to support the Energy Development Account, the CDE, in accordance to Ordinance 494 of September 2 nd, 2013. This amount represents an increase of R$ 600.0 million (41.4%) when compared to August. Payroll expenditures amounted to R$ 15.3 billion in September compared to R$ 15.6 billion in the previous month. It is worth mentioning the decrease of R$ 148.4 million on payments enforced by payrollrelated judicial remedies when compared to August. Table 9 - Other Current and Capital Expenditures - Brazil - 2013 R$ Million Description Aug/13 Sep/13 % Variation Judicial Sentences 50.9 2.6-94.9% Legislature 118.7 96.6-18.6% Judiciary 602.4 602.9 0.1% Extraordinary Credit 1 409.1 449.8 9.9% Growth Acceleration Program (PAC) 2 2,582.6 2,887.9 11.8% Others 3 159.0 617.7 288.5% Social Security Compensation 907.1 979.3 8.0% Discretionary 12,295.9 14,265.2 16.0% Min. of Health 5,342.9 6,034.0 12.9% Min. of Social Devpt 2,256.4 2,417.6 7.1% Min. of Education 2,178.1 2,201.6 1.1% Min. of Defense 1,284.1 995.3-22.5% Min. of Sci & Tech 282.6 533.8 88.9% Min. of Agrarian Devpt 112.6 107.5-4.5% Min. of Justice 230.1 226.4-1.6% Min. of Social Security 158.3 207.1 30.8% Min. of Transportation 50.6 75.7 49.7% Min. of Cities 140.5 51.5-63.3% Others 259.8 1,414.8 444.5% Total 17,125.7 19,902.1 16.2% 1. It excludes extraordinary credit regarding Growth Acceleration Program. 2. It corresponds to PAC expenditure, which can be used to deduce the primary balance target. 3. It includes subventions, special legal benefits, transfers to the National Water Agency; Funds (FDA/FDNE), grants, grants to amnestied, agreements, compensations Proagro, Federal District Constitucional Fund, PNAFE and paid in capital expenses to international organizations. 4. Revenues transfered to the Social Security system - RGPS as compensation for the reduction of payroll related contributions, according to Law 12,715/2012 14
National Treasury Expenditures Accumulated Balance compared to the previous Year From January to September 2013, National Treasury Expenditures rose by R$ 48.5 billion (13.7%) compared to the same period of 2012. It is worth mentioning the rises of R$ 36.6 billion (17.0%) in Current and Capital Expenditures and of R$ 11.6 billion (8.6%) in Payroll expenditures. Current and Capital Expenditures Graph 8. National Treasury Expenditure Brazil - 2012/2013 - R$ Billion Payroll 135.9 147.5 216.2 252.8 /12 /13 Others Current and Capital Expenditures Assistance Benefits (LOAS/RMV) Economic Subsidies and Grants Workers Support Fund (FAT) Graph 9. Current and Capital Expenditure Brazil - 2012/2013 - R$ Billion 8.5 7.8 22.0 25.3 29.5 34.8 156.2 180.9 /12 /13 In the first nine months of 2013, PAC expenditures increased R$ 2.2 billion (7.5%) compared to the same period of 2012. The growth of R$ 36.6 billion observed in Current and Capital Expenditures in the first nine months of 2013, when compared to the same period of 2012, can be explained by: i) growth of R$ 24.7 billion (15.9%) in Other Current and Capital Expenditures, mainly explained by the following variations: a) step up of R$ 15.8 billion (14.1%) in Discretionary expenses; b) increase of R$ 3.1 billion (172.3%) in outlays relating to Extraordinary Credits; and c) rise of R$ 2.2 billion (7.5%) in the Growth Acceleration Program - PAC expenses. In Discretionary Expenses, the main variations were the rise of R$ 6.3 billion (13.1%) in the Ministry of Health, of R$ 3.3 billion (18.8%) in the Ministry of Social Development and of R$ 1.9 billion (9.3%) in the Ministry of Education; ii) rise of R$ 5.2 billion (17.7%) in the Workers Support Fund FAT due primarily to the increase of 8.8% in the value of unemployment allowance and benefits according to Codefat Resolutions 707/2013 and 714/2013; iii) increase of R$ 3.3 billion (15.1%) in Assistance Benefits (LOAS/RMV) from January through September compared to the same period of 2012. This variation is explained by the increase of 5.0% on the number of paid benefits as well as on the minimum wage growth of 14.1% and 8.8% in 2012 and 2013 respectively; and iv) reduction of R$ 674.0 million (7.9%) in Economic Subsidies and Grants, compared to the first nine months of 2012, adding up to R$ 7.8 billion. This is mainly due to the execution of the following programs: a) Equalization of agricultural extension (reduction of R$ 1.2 billion); b) Investment Maintenance Program - 15
Payroll expenditures summed up to 4.21% of GPD in 2013. PSI (reduction of R$ 654.9 million); and c) Programme of Financial assets rehabilitation - PESA (increase of R$ 382.1 million). Payroll expenditures increased 0.01 p.p as a percentage of GDP, going from 4.20% in the first nine months of 2012 to 4.21% in 2013. In nominal terms, it recorded an increase of R$ 11.6 billion (8.6%), going from R$ 135.9 billion in 2012 to R$ 147.5 billion in 2013. There was an increase in payrollrelated judicially determined payments of R$ 581.8 million compared to the same period of the previous year. Table 10 - Other Current and Capital Expenditures - Brazil - 2012/2013 Description R$ Million % Variation Judicial Sentences 3,060.3 514.8-83.2% Legislature 1,029.6 1,070.1 3.9% Judiciary 5,066.9 5,309.2 4.8% Extraordinary Credit 1 1,814.1 4,940.1 172.3% Growth Acceleration Program (PAC) 2 29,704.4 31,923.8 7.5% Others 3 3,474.4 3,141.0-9.6% Social Security Compensation - 6,202.9 - Discretionary 112,017.8 127,811.4 14.1% Min. of Health 47,995.3 54,298.8 13.1% Min. of Social Devpt 17,480.2 20,765.2 18.8% Min. of Education 19,854.3 21,705.2 9.3% Min. of Defense 9,404.8 8,585.3-8.7% Min. of Sci & Tech 3,520.1 3,710.6 5.4% Min. of Agrarian Devpt 1,229.0 1,333.2 8.5% Min. of Justice 1,744.7 2,259.9 29.5% Min. of Social Security 1,442.1 1,605.6 11.3% Min. of Transportation 755.2 773.0 2.4% Min. of Cities 953.2 1,020.9 7.1% Others 7,638.8 11,753.8 53.9% Outlays regarding Total 156,167.4 180,913.2 15.8% outstanding commitments until September 2013, 1. It excludes extraordinary credit regarding Growth Acceleration Program. following the principles 2. It corresponds to PAC expenditure, which can be used to deduce the primary balance target. established in the Financing 3. It includes subventions, special legal benefits, transfers to the National Water Agency; Funds (FDA/FDNE), grants, grants to amnestied, agreements, compensations Proagro, Federal District and Budgeting Programming Constitucional Fund, PNAFE and paid in capital expenses to international organization. Decree, relating to current 4. Revenues transfered to the Social Security system - RGPS as compensation for the reduction of payroll related contributions, according to law 12,715/2012 and capital expenditure, excluding PAC, totaled R$ 22.7 billion. Of the total outstanding commitments outlays, Ministry of Education summed up to R$ 5.5 billion, Ministry of Health summed up to R$ 5.2 billion and Ministry of Defense summed up to R$ 3.0 billion. Graph 10. Outstanding Commitments Brazil - 2012/2013 - R$ Billion 1.7 21.3 Canceled Paid To pay 2.0 22.7 24.3 26.6 Sep/12 Sep/13 16
Table 11 - Economic Subsidies and Grants 1 Official Credit Operations - Brazil - 2012/2013 Description R$ Million Agricultural 4,051.4 2,985.9 Equalisation of Agricultural Extension 1,290.7 107.2 Equalisation of Rural and Agroindustrial Investments 50.8 330.5 Agricultural Price Policy 553.3 197.7 Harmonization of federal government loan 173.1 85.3 Harmonization of federal government procurement 75.2-56.8 Price maintenance guarantee 305.0 169.3 Pronaf 1,593.8 1,638.3 Pesa 208.3 590.3 Alcohol 0.7 0.0 Cocoa 0.4 0.0 Fundo da Terra/Incra 254.5 60.0 Funcafe 48.5 54.9 Revitaliza 50.5 6.9 Others 1,564.7 1,323.8 PSI 751.7 96.7 Op. Microcredit (EQMPO) 173.2 298.5 Op. Microcredit (EQPCD) 0.0 0.5 FND -34.1 0.0 FSA 53.3 250.0 Export (Proex) 207.5 123.8 Itaipu 2 268.2 381.2 EMGEA 145.0 173.0 Total 5,616.2 4,309.7 1. Does not Include outlays on grants to regional funds and spending on the restructuring of liabilities. 2. Refers to outlays on grants for Itaipu s electrical energy usage, following Legislative Decree 129/2011. Total LOAS Table 12 - Quantity of Issued Benefits - LOAS - Brazil - 2007 /2013 Variation compared to the previous year average Elderly Variation compared to the previous year average Persons With Disabilities R$ Million Variation compared to the previous year average Average 2007 2,575,467.0 7.8% 1,239,649.3 9.5% 1,335,817.8 6.3% Average 2008 2,810,538.0 9.1% 1,360,235.3 9.7% 1,450,302.8 8.6% Average 2009 3,052,295.3 8.6% 1,487,566.1 9.4% 1,564,729.2 7.9% Average 2010 3,290,375.3 7.8% 1,583,853.0 6.5% 1,706,522.3 9.1% Average 2011 3,506,563.7 6.6% 1,658,459.3 4.7% 1,848,104.3 8.3% Average 2012 3,683,282.7 5.0% 1,717,885.8 3.6% 1,965,396.9 6.3% Sep/07 2,547,066.2-1,224,488.3-1,322,577.9 - Sep/08 2,776,984.1 9.0% 1,343,090.9 9.7% 1,433,893.2 8.4% Sep/09 3,023,295.2 8.9% 1,472,877.0 9.7% 1,550,418.2 8.1% Sep/10 3,260,610.3 7.8% 1,573,289.3 6.8% 1,687,321.0 8.8% Sep/11 3,481,931.9 6.8% 1,650,342.7 4.9% 1,831,589.2 8.6% Sep/12 3,659,511.3 5.1% 1,709,361.4 3.6% 1,950,149.9 6.5% Sep/13 3,843,016.0 5.0% 1,777,464.2 4.0% 2,065,551.8 5.9% 17
Table 13 - National Treasury Expenditures - Brazil - 2012 / 2013 Description % GDP National Treasury Expenditures 10.94% 11.46% Payroll 4.20% 4.21% Current and Capital Expenditures 6.69% 7.21% Workers Support Fund (FAT) 0.91% 0.99% Economic Subsidies and Grants 1 0.26% 0.22% Assistance Benefits (LOAS/RMV) 0.68% 0.72% Others 4.83% 5.16% Transfers from Treasury to Central Bank 0.05% 0.05% 1. It includes outlays on grants to regional funds and, as of 2005, spending on the restructuring of liabilities. 18
Social Security Table 14 - Social Security Primary Balance - Brazil - 2012 / 2013 Description Aug/13 Sep/13 % Variation R$ Million % Variation I. NET REVENUE 24,881.3 25,025.1 0.6% 192,269.2 214,285.9 11.5% Total Revenue 27,628.9 27,749.2 0.4% 214,828.1 239,760.8 11.6% Contributions deposited in banks 23,983.3 24,000.9 0.1% 192,993.6 209,585.0 8.6% Contributions from SIMPLES 2,533.8 2,573.8 1.6% 19,880.6 22,004.7 10.7% Revenue from FIES 0.0 0.0-228.0 99.1-56.5% Judicial Payments 178.6 186.6 4.5% 1,642.1 1,774.9 8.1% Debt Rescheduling REFIS 26.2 8.7-66.9% 83.8 94.2 12.3% Social Security Compensation 1 907.1 979.3 8.0% 0.0 6,202.9 - (-) Restitutions -93.0-72.5-22.0% -630.0-727.4 15.5% (-) Transfers to Third Parties -2,654.7-2,651.7-0.1% -21,929.0-24,747.5 12.9% II. SOCIAL SECURITY BENEFIT 30,614.5 36,788.4 20.2% 231,466.6 261,899.2 13.1% III. PRIMARY BALANCE -5,733.2-11,763.4 105.2% -39,197.5-47,613.2 21.5% IV. PRIMARY BALANCE/GDP -1.21% -1.36% Source: Ministry of Social Security 1. Revenues transfered to the Social Security system - RGPS as compensation for the reduction of payroll related contributions, according to Law 12,715/2012. Social Security Monthly Balance compared to the previous Month Social Security recorded a deficit of R$ 11.8 billion in September 2013, as opposed to a R$ 5.7 billion deficit in August, partially explained by the early partial payment of Christmas bonus to a set of retirees and recipients (Decree 8,064/2013). In September 2013, Social Security recorded a deficit of R$ 11.8 billion, compared to a R$ 5.7 billion deficit in August. This behavior is mainly explained by the following reasons: i) increase of R$ 6.2 billion (20.2%) in Social Security benefits compared to August partially explained by the early partial payment of Christmas bonus to a set of retirees and recipients (Decree 8,064/2013); and ii) rise of R$ 143.8 million (0.6%) in Social Security net collection in September 2013 compared to the previous month, particularly due to the increase of R$ 40.0 million in Social Security Revenues collected by the Simples Nacional (simplified tax system), and an increase of R$ 17.5 million from social security contributions. There was an additional revenue of R$ 979.3 million related to the compensation for the reduction of payroll related contributions, according to Law 12,715/2012, which was R$ 72.3 million higher than the one recorded in the previous month. It s worth mentioning that the amount of compensation recorded in September refers to the compensation occurred in May, in accordance to Regulation RFB/MF/INSS/ MPS 2, March 28th, 2013. 19
Social Security Accumulated Balance compared to the previous Year From January to September 2013, social security deficit increased from 1.21% in the same period of 2012 to 1.36% of GDP. It corresponds to a step up of R$ 8.4 billion (21.5%) in nominal terms. As a result, the total deficit has reached R$ 47,6 billion in 2013. It s worth mentioning that the rural benefits have led a deficit of R$ 54.8 billion and the urban contributions have led a surplus of R$ 7.2 billion in /2013. 26.800 26.600 26.400 26.200 26.000 25.800 25.600 25.400 25.200 Graph 11. Conceded Benefits of the General Regime Brazil - 2012/2013 Quantity (Million) Average Value (R$) 832.45 25.797 Sep/12 26.681 Sep/13 899.57 920.00 900.00 880.00 860.00 840.00 820.00 800.00 780.00 In the same period, social security net collection increased R$ 22.0 billion (11.5%), due to the growth of 11.6% in overall wages, which impacts contributions on payroll, and due to the collection from the Simples Nacional tax system that increased R$ 2.1 billion (10.7%). It is worth noting that the social security balance has been affected by the recent tax exemptions (Laws 12.715/12 and 12.794/12 and PM 601/12). The expenditure rose by R$ 30.4 billion (13.1%) compared to the first nine months of 2012. This behavior is mainly explained by the following reasons: i) a R$ 67.12 (8.1%) rise on the average value of paid benefits, as a consequence of minimum wage increase as well as the rise of above-the-ceiling benefits; ii) an increase of 7,9 million (3.5%) on the quantity of paid benefits: 3.2 million concerning retirement due to age, 1.7 million due to contribution time retirement and 1.6 million due to survivor pensions; and 20 iii) an increase of R$ 519.1 million in judicial remedies related to Social Security benefits. Description Table 15 - Social Security Primary Balance - Brazil - 2012 / 2013 R$ Million % Variation % GDP NET REVENUE 192,269.2 214,285.9 11.5% 5.95% 6.11% Urban 188,047.9 209,784.8 11.6% 5.82% 5.98% Rural 4,221.2 4,501.2 6.6% 0.13% 0.13% BENEFITS 231,466.6 261,899.2 13.1% 7.16% 7.47% Urban 179,213.6 202,563.7 13.0% 5.54% 5.77% Rural 52,253.1 59,335.5 13.6% 1.62% 1.69% PRIMARY BALANCE -39,197.5-47,613.2 21.5% -1.21% -1.36% Urban 8,834.4 7,221.1-18.3% 0.27% 0.21% Rural -48,031.8-54,834.3 14.2% -1.49% -1.56% Source: Ministry of Social Security
Table 16 - Quantity of Conceded Benefits of the General Regime - Brazil - 2012 / 2013 Description Aug/13 Sep/13 % Variation In Thousand Benefits % Variation GENERAL REGIME BENEFITS 26,633 26,681 0.2% 229,269 237,255 3.5% Social Security Contributory 25,785 25,834 0.2% 221,776 229,684 3.6% Retirements 17,125 17,168 0.3% 147,248 152,647 3.7% by Age 9,034 9,058 0.3% 77,238 80,426 4.1% by Invalidity 3,099 3,103 0.1% 27,283 27,764 1.8% by Length of Contribution 4,992 5,007 0.3% 42,727 44,457 4.0% Survivor Pension 7,091 7,102 0.1% 61,783 63,391 2.6% Sickness Benefits 1,390 1,389-0.1% 11,384 12,119 6.5% Maternity Benefit 92 88-5.0% 709 779 10.0% Others 87 87 0.9% 653 748 14.6% Labor Accident Insurance 848 848 0.0% 7,493 7,571 1.0% Retirement by Invalidity 186 187 0.3% 1,593 1,660 4.2% Survivor Pension 121 121-0.2% 1,109 1,095-1.3% Sickness Benefits 176 175-0.5% 1,560 1,555-0.3% Partial Invalidity 301 301 0.3% 2,623 2,684 2.3% Supplementary Benefit 63 63-0.5% 608 576-5.3% Source: Ministry of Social Security Note: Data subject to changes 21
Acronyms Fiscal Balance most usual Acronyms ANP National Agency of Petroleum, Natural Gas and Biofuels Caged General File of the Employed and Unemployed CDE Energy Development Account CIDE Contribution on Intervention in the Economic Domain Cofins Contribution to Social Security Financing CPMF Provisional Contribution on Financial Operations CPSS Contribution to Civil Service Social Security CSLL Social Contribution on Net Corporate Profits Emgea Assets Management Corporation FAT Workers Support Fund FGTS Severance Indemnity Fund for Employees Fistel Telecommunications Supervision Fund FND National Development Fund FPE State Revenue Sharing Fund FPM Municipal Revenue Sharing Fund FSB - Brazilian Sovereign Wealth Fund Fundeb Fund for the Maintenance and Development of the Basic Education ICMS Tax on the Circulation of Goods and Services IGP-DI General Price Index Internal Supply INSS National Social Security Institute IOF - Tax on Credit Operations, Exchange and Insurance IPI Industrialized Products Tax IRPF Personal Income Tax IRPJ Corporate Income Tax IRRF Withheld Income Tax LOAS Organic Social Assistance Law PAC Growth Acceleration Program Paes Tax Installment Payment Plan Pasep Program of Civil Service Asset Formation PESA Program of Financial Assets Rehabilitation PIS Social Integration Program 22
POOC Program of Official Credit Operations Proex Export Financing Programme Pronaf National programme for the strengthening of family farming PSH Subsidy programme for social interest housing PSI Investment Maintenance Program Refis Fiscal Recovery Program RFB Secretariat of the Federal Revenue of Brazil RGPS Social Security General Regime RMV Lifetime Monthly Income 23