UPDATE 1-Brazil posts biggest ever primary deficit for October
(Recast, adds analyst comment, historical data and context)
By Alonso Soto
BRASILIA Nov 30 (Reuters) - Brazil had its worst primary budget deficit for the month of October on record, central bank data showed on Monday, evidence of the continued deterioration of the country's finances despite government efforts to rein in spending.
The primary deficit jumped to 11.530 billion reais ($3.00 billion) in October from a gap of 7.318 billion in September and a surplus of 3.729 billion in October of last year. Market analysts surveyed by Reuters expected a deficit of 13.750 billion reais in October.
Although the country's overall budget deficit narrowed to 29.414 billion in October from the previous month, on an annual basis the gap rose to the equivalent of 9.5 percent of gross domestic product. In May, that gap in 12 months was equivalent to 7.92 percent of GDP.
A sharp drop in tax revenues has hobbled President Dilma Rousseff's efforts to shore up Brazil's finances with spending cuts and tax hikes this year.
The finances of the once-booming economy have deteriorated to the point where Rousseff canceled a trip to Asia this week to save money and froze 10 billion reais in spending to comply with the country's budget law.
"We have yet to detect a visible turnaround in the fiscal picture," said Alberto Ramos, senior economist with Goldman Sachs. "A deep, permanent, structural fiscal adjustment remains front-and-center on the policy agenda to restore both domestic and external balance."
In September, Standard & Poor's stripped Brazil of its prized investment grade rating and Rousseff has announced a fiscal savings package to eke out a primary surplus in 2016 to avoid other ratings agencies from cutting Brazil's debt grading to junk territory. However, a lingering political stalemate in Congress is delaying those measures, leading most analysts to believe the government will again fail to deliver a positive number next year. Continuación...