Brasília, 4/26/2006 (Agência Brasil - ABr) - The deputy secretary of the National Treasury, Tarcísio Godoy, says that although the cumulative primary surplus for the first quarter of this year, at R$ 14.606 billion, is R$2.4 billion less than it was during the same period in 2005, the result remains in line with the government's target of a final primary surplus of 4.25% of GDP for the year.

Godoy blames the difference in the 2006 and 2005 first quarter surpluses on differences in government bookkeeping this year (some telecommunications tax revenue collected in March will only be registered in April).

According to Godoy, in the first quarter, total government revenue was actually up R$7.3 billion, while spending rose R$6.9 billion, compared to the same period in 2005. The spending increases were due to payroll expenses (up R$3.3 billion), administrative costs (up R$3.6 billion) and more investments (R$2.3 billion, compared to R$1.3 billion in 2005).

Godoy concluded by saying that if the government feels there is a real threat to its primary surplus target, it can invoke the Accountability Law (Lei de Responsabilidade Fiscal) and place an embargo on funding for any further expenses.

Translation: Allen Bennett