UPDATE 1-Brazil govt finances improve in October, but less than expected

Jamie McGeever and Marcela Ayres

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BRASILIA, Nov 28 (Reuters) - Brazil's public finances improved in October, Treasury figures showed on Thursday, as a seasonally expected monthly surplus helped reduce the government's overall deficit this year and keep it on track to come in below target.

Still, the 8.7 billion reais ($2.05 billion) primary budget surplus in October was less than economists had expected and social security spending continued to rise, highlighting the underlying strains on the public accounts.

The central government's primary budget surplus in October was less than the 10.7 billion reais surplus median forecast in a Reuters poll, and 11.0% smaller than the 9.5 billion reais surplus posted in the same month last year.

October tends to be a surplus month, thanks to the inflow of oil-related funds and corporate and income tax intakes.

The year-to-date primary deficit, before interest payments are taken into account, narrowed to 63.85 billion reais, 14.8% less in real terms compared with the first ten months of last year, Treasury said.

In the 12 months to October the primary deficit stood at 113.1 billion reais, or 1.1% of gross domestic product, down from 1.3% of GDP a year ago. The government's 2019 target is for a deficit of 139 billion reais.

But social security spending rose 8.0% on the same month a year ago to 14.6 billion reais. That swelled the accumulated social security deficit so far this year to 179.9 billion reais, some 3% wider than a year ago, Treasury figures showed.

($1 = 4.23 reais) (Reporting by Marcela Ayres; Writing by Jamie McGeever; Editing by Marguerita Choy)

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