(Corrects target in 2nd paragraph to say reais, not dollars)
* Central bank official recognizes accounting shift
* Economic stimulus compromising fiscal target as in 2010
* Sept. surplus 1.6 bln reais vs. 4.2 bln reais f'cast
By Silvio Cascione and Luciana Otoni
BRASILIA/SAO PAULO, Oct 30 Brazil will achieve
its 2012 budget target only by deducting spending on some public
investments, a central bank official said on Tuesday, suggesting
that aggressive economic stimulus would compromise a budget
target as it did in 2010.
Weak growth in the world's sixth-largest economy and tax
breaks to stimulate struggling industries have jeopardized
President Dilma Rousseff's 139.8 billion reais ($68.9 billion)
primary surplus target, which equals about 3.1 percent of GDP.
In the first nine months of the year the government reached
only 54 percent of the target, meaning it would need to average
more than 21 billion reais in surplus in each of the next three
months to meet its goal under the same accounting as last year.
Brazil's primary budget surplus fell sharply in September
from a year ago to 1.591 billion reais in
September, the central bank said earlier on Tuesday, well below
analysts' median forecast of 4.2 billion reais.
The only way for Brazil to achieve its budget target now
seems to be a deduction of up to 25 billion reais in some public
investments. The limit was set by this year's budget law, but
authorities insisted until Monday that the government wouldn't
need to resort to it.
"The central bank works considering it will fulfill the
target by using the prerogative of deducting (expenditures) from
the target," Tulio Maciel, the central bank's head of economic
research, told jornalists at a press conference.
The primary budget surplus is a gauge closely watched by
investors because it measures a country's ability to service its
debt. It represents the excess of revenue over expenditures
before interest payments are taken into account.
Meeting or exceeding the surplus goal has been the
government's top fiscal accounts priority for more than a
Rousseff has cut billions of reais in taxes for companies
and consumers this year in a bid to revive the economy. Last
week she extended a tax reduction for local carmakers through
the end of the year.
Three official sources had told Reuters in September that
Brazil was in danger of narrowly missing its 2012 primary budget
surplus target, likely forcing the government to use different
accounting methods to reach it.
The last time Brazil had to tweak the numbers was in 2010
after a surge in spending by Rousseff's predecessor, Luiz Inacio
Lula da Silva.
Treasury Secretary Arno Augustin had said on Monday that the
government still expected to meet its budget target as a pick up
in the economy may help boost tax revenues.
In the 12 months through September, the primary surplus
represented 2.30 percent of gross domestic product, down from a
previously reported 2.46 percent in August. It was the lowest
12-month trailing figure so far this year and marks a steep
decline from this year's peak of 3.31 percent in February.
Brazil's overall budget balance, which includes interest
payments, posted a deficit of 12.254 billion reais in September,
narrower than the 16.121 billion reais deficit in August.
Debt servicing costs have been declining after the central
bank cut interest rates ten times in a row since August 2011 to
a record low of 7.25 percent.
The public debt-to-GDP ratio rose to 35.3 percent in
September from 35.1 percent in August.
The forecasts of 12 analysts polled by Reuters for the
primary budget surplus ranged from a deficit of 0.7 billion
reais to a surplus of 5.5 billion reais.
(Additional reporting by Tiago Pariz, Anthony Boadle and
Luciana Otoni in Brasilia; Editing by W Simon and Chizu