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BRASILIA, June 30 (Reuters) - Brazil reported a primary budget deficit for May that was its widest for 2015, making its annual savings goal more difficult to achieve despite government efforts to raise taxes and cut spending.
The country posted a primary budget deficit of 6.9 billion reais ($2.23 billion), central bank data showed on Tuesday. This was in line with market expectations for a gap of 7 billion reais and compared with a primary surplus of 13.445 billion reais in April.
The primary balance, or what the government saves prior to interest payments, is an important gauge of its ability to repay its obligations.
Brazil has accumulated a primary surplus of 25.5 billion reais in the first five months of the year, just over a third of the overall goal for the year. The government's goal is to save 66.3 billion reais in 2015, or the equivalent of 1.1 percent of gross domestic product.
But a drop in tax revenues caused by a sharp economic contraction is complicating Finance Minister Joaquim Levy's efforts to shore up the country's finances after years of heavy spending.
Congress severely watered down some fiscal savings bills introduced by President Dilma Rousseff's administration earlier this year, reducing cuts in social security and unemployment benefits.
In the 12 months through May, the primary budget deficit narrowed to an equivalent to 0.68 percent of gross domestic product from a 0.76 percent deficit in the year ended in April.
The disappointing fiscal results may increase resistance to Rousseff's austerity plan in Congress. Several of her allies there have been complaining that the tax hikes and spending cuts are deepening what is expected to be the country's worst recession in 25 years.
Levy, a fiscal hawk who served as Treasury chief a decade ago, has said it is too early to lower the budget savings target and that the government has new measures in hand to raise revenues.
The government is counting on billions of dollars from a sale of shares in the insurance unit of state-run lender Caixa Economica Federal.
The overall budget balance, which includes interest payments, returned to negative territory in May with a deficit of 59.777 billion reais. ($1 = 3.0952 Brazilian reais) (Reporting by Alonso Soto and Marcela Ayres; Editing by Lisa Von Ahn)