(Adds background on fiscal goal, additional data)
BRASILIA, March 31 (Reuters) - Brazil posted an unexpected primary budget deficit of 2.3 billion reais ($721 million) in February, central bank data showed on Tuesday, highlighting the challenges the government faces in achieving its closely watched fiscal goal this year.
The primary budget, or savings before debt payments, serves as a gauge of the country’s capacity to repay its debt. It had been expected to show a surplus of 1.5 billion reais in February, according to the median forecast of 17 analysts surveyed by Reuters.
The gauge is of particular importance for Brazil, where President Dilma Rousseff started her second term in office with a concerted effort to stave off a credit rating downgrade after years of lavish spending failed to spur growth.
Her new Finance Minister Joaquim Levy has severely limited government spending while raising taxes to help close the fiscal gap. On Tuesday, Levy told Brazil’s Senate that he is ready to take measures to ensure enough tax revenues to meet the target.
February’s data shows how difficult the challenge will be.
In the 12 months through February, the primary budget balance was a deficit equivalent to 0.69 percent of Brazil’s gross domestic product. The government’s goal is to save the equivalent of 1.2 percent of GDP in 2015.
The data could reinforce calls from many analysts for more ambitious austerity measures if the government is to reduce its debt burden and ultimately drive down credit costs in Latin America’s largest economy.
Levy said he is aiming to initially stabilize the gross debt at current levels and push it down in coming years to reduce debt costs and allow for more social programs.
The country’s public gross debt as a percent of GDP came in at 60.9 percent in February, the central bank said on Tuesday, reflecting its new methodology for the indicator.
The country posted an overall budget deficit of 58.637 billion reais in February.
$1 = 3.19 Brazilian reais Reporting by Luciana Otoni and Leonardo Goy; Writing by Asher Levine; Editing by Jeffrey Benkoe and Meredith Mazzilli