UPDATE 3-Brazil primary budget deficit swells, debt seen climbing

martes 29 de diciembre de 2015 18:36 GYT

(Adds increase in minimum wage, impact on budget )

By Alonso Soto and Marcela Ayres

BRASILIA Dec 29 (Reuters) - Brazil's primary public sector budget deficit widened sharply in November, the central bank said on Tuesday, as falling tax revenues undermined government efforts to shore up public accounts amid a deepening recession.

At 19.567 billion reais ($5.07 billion), the November primary shortfall was the third worst on record. The deficit, which represents revenues minus expenditures before debt interest payments, is a closely watched gauge of creditworthiness.

The November shortfall surpassed October's 11.5 billion reais and also topped the Reuters poll forecast of 14 billion reais.

President Dilma Rousseff has failed to plug a widening deficit, as her left-leaning government seeks to safeguard welfare payments and a restive Congress blocks passage of bills to raise revenues. Including debt payments, Brazil's overall deficit was running at a hefty 9.3 percent of gross domestic product in the 12 months through November.

In December, Fitch became the second credit ratings agency to cut its rating on Brazilian debt from investment-grade to junk status, which meant that many foreign investments funds, under their bylaws, could no longer invest in the country.

On Tuesday, the central bank said it expects Brazil's gross debt to climb to 70.7 percent of gross domestic product next year, above the 70 percent threshold that ratings agencies see as a debt-servicing risk factor.

The bank based its estimates on the assumption that the government will meet its 2016 primary surplus target of 30.5 billion reais, or 0.5 percent of GDP.   Continuación...