UPDATE 3-Brazil government deficit spending leaps as election nears

martes 30 de septiembre de 2014 15:54 GYT

(Adds results of Telecom auction, analyst and Moody's comments)

By Alonso Soto

BRASILIA, Sept 30 (Reuters) - Brazil posted its fourth straight monthly primary budget deficit in August, making it nearly impossible for President Dilma Rousseff's administration to achieve a key fiscal target this year as spending picks up before next month's elections.

The consolidated public sector primary deficit reached 14.460 billion reais ($5.89 billion) in August, the biggest for that month since at least 2001 and a far wider gap than the 5.1 billion reais expected by the market, central bank data showed on Tuesday.

A sharp deterioration of Brazil's finances under Rousseff has put the once-booming economy in the sights of rating agencies and eroded investor confidence in the country.

The government has only fulfilled 10 percent of its 2014 primary surplus target in the first eight months of the year. That means the administration has four months to save 88 billion reais, or 1.7 percent of gross domestic product, to reach its goal.

"The government's fiscal policy is completely out of sync. You can't keep spending so much money while your income slows," said Alex Agostini, chief economist with Austin Rating in Sao Paulo.

The primary balance, or savings before debt payments, is closely watched by investors and serves as a gauge of the country's capacity to repay its debt.

Brazil's finances have turned into a hot campaign topic ahead of Sunday's presidential vote. Rousseff's two main rivals accuse her of relaxing the tough fiscal rules that helped the economy stabilize after years of crisis.   Continuación...