Brazil’s Fiscal Position

According to the Brazilian Central Bank, the overall public sector posted a primary surplus equivalent to 6.51% of GDP between January and April of 2007, compared to 5.62% of GDP in the same period of 2006. Almost two thirds of the increase in primary surplus is due to a significant improvement in the performance of regional governments as well as the states. In turn, the states increased their surplus from 0.96% to 1.49% of the GDP while county governments´ surplus rose from 0.15% to 0.23%. The stronger result by the states is mostly due to higher tax collection in the states. According to Bradesco, there was an increase in the ICMS value-added tax on sales and services in the states of 5.5% in real terms compared with the same period of 2006. The real rise in the ICMS tax over the last 12 months comes to 6.9%. The transfers from the Federal Government to the state and municipal governments rose by 10.8% to April.