(Adds Treasury chief comments, expenditures data throughout)
By Alonso Soto
BRASILIA, April 29 (Reuters) - Brazil's central government posted a smaller primary budget surplus in March compared to a year ago, though officials highlighted a slight drop in expenditures as proof that fiscal belt-tightening is starting to take effect.
The central government's primary budget surplus totaled 1.464 billion reais ($498 million) last month, down 54 percent from March 2014 and its smallest for that month since 2013, Brazil's treasury said on Wednesday.
The central government account, which covers federal ministries, the central bank and social security, had recorded a surprise primary deficit of 7.4 billion reais in February. The primary balance, or savings prior to debt interest payments, is a key gauge of a country's capacity to repay its debt.
In the first quarter, the central government accumulated a surplus of 4.7 billion reais, down 68 percent from a year ago in real terms due to a drop in revenues.
Treasury Secretary Marcelo Saintive said expenditures fell 0.8 percent in real terms in the first quarter from a year ago in what he described as "the first step" of the government's austerity push.
Saintive acknowledged that the surplus in March was smaller than what the government expected, but said he is confident the administration will achieve its surplus goal of 1.2 percent of the gross domestic product this year.
"We are starting to revert our negative primary balance trend," Saintive told reporters. "We will continue to reduce expenditures in line with our strategy."
He said the government still has room to raise taxes to rebalance finances. More revenues from the dividends of state-run enterprises could enter the government accounts in coming months, Saintive added.
In the first quarter, government expenditures on personnel and social welfare fell 1.9 percent in real terms from a year ago.
Non-obligatory expenditures fell 13.3 percent in real terms in March from the year-earlier period. Spending on the government's flagship infrastructure investment program fell 37.6 percent from March 2014.
The central bank will release the consolidated primary balance, which includes states and municipalities, on Thursday.
$1 = 2.9385 Brazilian reais Reporting by Alonso Soto; editing by Grant McCool