Finance Secretary downplays fiscal deficit.

Bahia 247 - The state finance secretary, Manoel Vitório, justified this Wednesday (1st) the primary deficit of R$ 1,3 billion in Bahia, which, according to the Central Bank (BC), represents the third largest fiscal shortfall among Brazilian states.

Vitório argues that "the difference reflects the supplementary budgets of the other branches of government in 2015 and the broad and diversified agenda of public investments resulting from credit operations obtained thanks to a comfortable debt profile, added to surpluses from other fiscal years."

The secretary stressed that the indicator "should not be confused with the state's ability to honor its commitments," and cited the balance sheet for the first four months of this year, released last weekend.

He further states that the formula used to define the primary deficit does not account for resources resulting from credit operations and surpluses from previous fiscal years, which appear with a negative sign. In this context, the R$1 billion surplus used by the government for investment in 2015 was not taken into account.

"This is an accounting calculation formula that also does not consider, for example, the so-called debt service, through which the State regularly amortizes these loans."

The secretary also mentions the period evaluated by the method. "The calculation of the primary result only accounts for revenues from the last 12 months, but on the other hand, all expenses incurred are considered, including those covered by revenues that are in the treasury but were acquired in a previous period. Considering separate periods from one year to another inevitably generates distortions."