Federal revenue in 2024 expected to be second-highest on record, aiding efforts to erase primary deficit
01/13/2025
Boosted by extraordinary payments from oil giant Petrobras and the Brazilian Development Bank (BNDES), Brazil’s federal revenue from dividends and profit-sharing rebounded in 2024, helping the government stay within its fiscal target range. Government projections indicate R$72.97 billion in dividends from state-owned enterprises (SOEs) last year, which, if confirmed, would mark the second-highest figure on record in nominal terms, trailing only 2022’s R$87 billion.
From January to October 2024, federal receipts totaled R$41.3 billion. While November and December figures have not yet been officially released, preliminary data from SOEs and public disclosures suggest the government is close to meeting its target. Treasury data through November, delayed by nearly three weeks, will be released on January 15, with full-year figures expected in February.
According to XP Investimentos, government revenue from dividends and profit-sharing reached R$72.38 billion in 2024, driven by significant year-end transfers from BNDES and Petrobras. BNDES told Valor it transferred R$5.8 billion in dividends to the federal government in November and an additional R$13.6 billion in December, while Petrobras contributed approximately R$9.7 billion during the same period.
Petrobras and BNDES accounted for the bulk of SOE dividend payments in 2024. Petrobras said it distributed R$29.7 billion to its controlling shareholder, while BNDES transferred R$29.5 billion. Together, the two state-owned companies represented 81% of the federal government’s dividend revenue. Banco do Brasil followed with R$7.5 billion (10%), and Caixa Econômica Federal contributed R$2.79 billion (3.8%). The remainder came from smaller state-owned enterprises.
After years of lower transfers, except in 2022, the upward trend in dividend payments provided critical support for primary fiscal results. These revenues, categorized as primary revenue, have become essential for the government’s effort to erase the primary deficit.
BNDES President Aloizio Mercadante said the bank increased dividend payments in 2024 to support fiscal results, while Petrobras approved extraordinary distributions from reserve accounts.
In a statement, BNDES confirmed it had “expanded dividend payments to contribute to fiscal efforts and economic stability,” while ensuring it could still invest in strategic sectors. Petrobras said “its distributions aligned with its corporate bylaws and shareholder remuneration policy”, which allows extraordinary payments as long as the company’s financial sustainability is preserved.
Economists are divided on whether the trend of high dividend payments will continue. Tiago Sbardelotto of XP Investimentos expects extraordinary transfers, particularly from Petrobras and BNDES, to remain a key strategy for boosting fiscal results amid challenges in increasing tax revenue through legislative changes. “It’s unlikely we’ll see dividend levels drop back to R$30 billion or R$40 billion in the coming years,” he said.
Felipe Salto, chief economist at Warren Investimentos, said BNDES’s payments are likely to remain elevated but cautioned against overreliance on Petrobras. “Petrobras’s payments depend on oil prices, so the government shouldn’t count on this revenue source for its fiscal recovery plans. BNDES, on the other hand, is tied to its operational policies, which suggest higher dividend payments as the bank increases disbursements,” Mr. Salto said.
Mr. Salto added that while dividend revenue is valuable, it should not form the backbone of fiscal policy. “This income is welcome but unpredictable. A sound fiscal strategy requires permanent measures to control spending and increase revenue,” he said.
Fiscal targets
Finance Minister Fernando Haddad said the government ended 2024 with a primary deficit of 0.1% of GDP, estimated at R$10 billion to R$15 billion depending on GDP calculations. This excludes extraordinary expenditures related to the state of Rio Grande do Sul.
Mr. Sbardelotto of XP warned that 2024’s results should be interpreted cautiously. “The fiscal target was only met because of significant extraordinary revenues, including dividends,” he said.
Banco do Brasil said its dividend payments complied with its “corporate bylaws, shareholder remuneration policy, and board decisions.” Caixa Econômica Federal noted that its 2024 dividend payments were related to 2023 results. “There was no dividend anticipation in 2024. We clarify that the amount paid in the 2024 fiscal year complies with Caixa’s bylaws.”
*By Jéssica Sant’Ana — Brasília
Source: Valor International