UPDATE 2-Brazil to meet key fiscal savings goal in 2014 -Rousseff

Wed Aug 6, 2014 6:26pm EDT

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BRASILIA Aug 6 (Reuters) - Brazilian President Dilma Rousseff said on Wednesday her government will be able to meet its primary surplus goal for this year despite a string of negative results from a slowing economy.

"The primary surplus does fluctuate from time to time. We will be able to achieve the primary surplus target for this year," Rousseff told reporters after discussing her policies before Brazil's farm lobby, CNA.

The primary surplus, which represents the public sector's excess revenue over expenditures before the payment of interest on debt, fell well below expectations in the first half of the year. Many analysts believe the government could revise down its goal of a primary surplus equal to 1.9 percent of gross domestic product.

In the first six months of 2014, the primary surplus was equal to 1.17 percent of GDP.

ETHANOL BOOST

Rousseff also said she is considering more tax breaks for ethanol producers struggling with rising costs and artificially low fuel prices.

The Rousseff administration has kept fuel prices below international levels in a bid to curb above-target inflation. That policy has hurt the finances of state-run oil company Petroleo Brasileiro, which is forced to buy fuel at international prices and sell it cheaper.

Rousseff, a leftist economist who is running for re-election in October, said her government and car makers are studying whether to raise ethanol in the gasoline mix to 27.5 percent from 25 percent.

The lower chamber of Congress passed a bill on Wednesday that will allow the government to raise the obligatory mix to 27.5 percent, and raise the biofuel mix in diesel to 7 percent as of Nov. 1, from 6 percent at present.

The increase sought by ethanol producers would help pull the sector from its crisis by increasing demand. The auto industry, however, has cautioned that a higher ethanol content in gasoline could cause problems to motor vehicles. (Reporting by Alonso Soto and Anthony Boadle; Editing by Lisa Von Ahn and Leslie Adler)

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