UPDATE 2-Brazil posts second-worst primary budget deficit ever

lunes 30 de junio de 2014 12:06 GYT

(Adds central bank and analyst comments, data and context)

By Alonso Soto

BRASILIA, June 30 (Reuters) - Brazil posted in May its second-widest monthly primary budget deficit ever, a worse-than-expected result that puts at risk the country's key fiscal and debt servicing goal for the year.

The country's public sector ran a primary budget deficit of 11.046 billion reais ($5 billion), central bank data showed on Monday, worse than market expectations for a deficit of 9.25 billion reais. It was the widest primary deficit on record after the 20.951 billion reais gap posted in December 2008.

Closely watched by financial markets, the primary budget balance is a key gauge of the country's creditworthiness. It measures how much government revenue can be earmarked to meet interest payments on the debt.

A negative primary balance means that, strictly speaking in conceptual terms, there was insufficient revenue in May to meet all expenditures, including interest obligations.

However, debt payments are made with annual fiscal accounts in mind.

For 2014, Brazil's public sector targets a primary budget surplus of 1.9 percent of the gross domestic product - but the latest data from May stirred doubts that threshold could be reached.

"It will be very difficult for the government to meet the 1.9 percent of GDP fiscal target in 2014 unless it is able to count on significant extraordinary non-recurrent revenue," Alberto Ramos, senior economist with Goldman Sachs, said in a research note.   Continuación...