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Structural primary balance

Conventional fiscal statistics are highly affected by factors unrelated to government intervention. For example, it is possible to associate an economic crisis, which leads to a GDP contraction, with a fall in fiscal balances. However, solely from this analysis, one cannot say that the fiscal policy was expansionary. This worse fiscal position may have just been a direct outcome of the loss of revenue caused by the economic downturn.

Analyzing fiscal statistics in contexts like this and in situations where other atypical factors may affect fiscal results is a challenge to be faced by everyone engaged in monitoring fiscal policy. International experience has shown that an important step in improving the monitoring of the fiscal policy is to adjust its conventional results to the economic cycle by means of the so-called Structural Primary Balance. In order to contribute to this discussion, the Economic Policy Secretariat - SPE will periodically publish an estimate of the Structural Primary Balance for the Brazilian economy. This indicator will be disclosed annually, on annual and quarterly basis, after the publication of the Brazilian National Accounts of the previous year.

The Structural Primary Balance can be defined as the result consistent with the trend GDP, with asset prices (mainly oil) in their long-term equilibrium levels and free of the effects of non-recurrent fiscal operations. Its main advantage over conventional fiscal balances is to debug the effect of economic cycles and non-recurrent operations, which do not necessarily reflect a permanent change in the country's fiscal position. Thus, especially in the indicator proposed by the SPE, the Structural Fiscal Primary Balance represents the savings generated by the discretionary and recurrent effort of the Public Sector that contributes to the fiscal solvency of the Brazilian State.

In 2014, in the first edition of its Fiscal Monitor Report, the SPE proposed an initial methodology for the Structural Primary Balance estimation. In 2016, the methodology and routines were updated, leading to a new edition of the Fiscal Monitor Report. This new report incorporates the advances and new estimations. Finally, in 2017, the methodology was consolidated in a Methodological Note, which aggregates some refinements to the methodology published in the last Fiscal Monitor Report. This Methodological Note presents the methodology used to calculate the estimations disclosed in the Structural Primary Balance Bulletin – 2016. (The published editions of the Fiscal Monitor, as well as the mentioned Methodological Note, are only available in Portuguese).

Hence, the SPE offers a regular publication of the estimation of the Structural Primary Balance, including its time series in an electronic worksheet, to be explored by economic analysts, academics and researchers in general.